Analysis Dairy
Summer holidays affect demand for cheese
Summer holidays in Northwestern Europe have started and that also affects the sales opportunities of cheese. Especially at the front end of the market (meaning: the demand for short-term deliveries) is weak.
After cheese prices rose quickly in May, prices took a significant step back in recent weeks. This seems to have been a correction on perhaps too rapid price increases that were mainly based on sentiment. On the other hand, the market weakens in the run-up to the summer holidays. Due to the outflow of vacationers, demand in our part of Europe is estimated to be up to 5% lower in the coming weeks. Not only cheese is affected by this, but also other fresh markets such as eggs and meat, for example.
Another underlying cause of some price pressure is the favorable summer weather for milk production. Although the supply figures for June are still missing, they are likely better than initially estimated. The preliminary weekly supply figures in Germany and France confirm this picture.
Difference between nearby and forward deliveries
Meanwhile, benchmarks for Gouda and Edam have fallen back to just under €4,000 per ton, with no apparent price pressure at the moment. For deliveries from mid-August, prices are a few hundred euros per ton higher. Other cheeses like cheddar and mozzarella also share in this market scenario. In other years, mozzarella could benefit from extra demand from Southern Europe in the summer months, but that is currently less the case.
It is currently difficult to assess how the cheese market will move towards autumn. There seems to be no excess inventories, at least making the foundation look reasonably solid.
