Dear Dairy: 89% Were Bullish. GDT Fell 1.1%. What Did We Miss?
Event 412 broke the recent winning streak. The headline call was wrong — but underneath it, dairy markets are becoming more divided.
Dear Dairy,
Sometimes the useful part of a forecast is getting it right.
Sometimes it is understanding why it was wrong.
Ahead of GDT Event 412,
35 people voted in the Dear Dairy poll:
34% expected a rise above 2.5%
54% expected a rise between 0% and 2.5%
11% expected a decline between 0% and 2.5%
0% expected a decline greater than 2.5%
That means 88.6% of respondents were bullish.
Using the usual Dear Dairy bucket midpoints, the crowd implied a move of roughly +1.82%.
My own Dear Dairy Index was also bullish:
DDI: 62/100 — Bullish, Moderate Conviction.
Then the market answered.
GDT fell 1.1%.
There is no reason to dress that up.
The crowd got the direction wrong.
The DDI got the headline direction wrong.
I got the headline direction wrong.
That is important to record.
If Dear Dairy and the DDI are going to become useful over time, the misses have to remain in the record alongside the successful calls.
But this −1.1% conceals a much more complicated market.
Underneath the index
Event 412 produced very different moves across products:
Butter: −5.7%
Mozzarella: −6.0%
AMF: −3.0%
WMP: −0.8%
SMP: +0.1%
Cheddar: +16.5%
Approximately 42,444 tonnes traded.
This is increasingly difficult to describe as one dairy market.
Milkfat, powders and individual cheese categories are behaving very differently.
And commercially, that distinction matters considerably more than whether the headline index moved one percentage point higher or lower.
The crowd became more bullish just as GDT turned lower
Before Event 411, the Dear Dairy audience was 86.4% bullish.
GDT subsequently rose 0.9%.
Before Event 412, bullish sentiment increased again to 88.6%.
This time GDT fell.
That does not mean strong consensus should automatically be treated as a contrarian signal.
But it is something worth tracking.
The market saw genuine bullish evidence: stronger powders, improving European physical indications and four consecutive positive full GDT events.
What we underestimated was the weakness elsewhere — particularly in milkfat.
Milkfat is now the clearest warning
Butter falling another 5.7% matters.
AMF fell another 3.0%.
Those moves follow weakness in the previous event as well.
Global milkfat is therefore sending a much weaker signal than the powder complex.
Europe is not Oceania. European milk availability, inventory, replacement economics and contracts can produce very different prices.
But our own European physical indications have also changed.
The latest Kudron Market Indication is approximately:
Butter: €3,950/MT
Cream: €4,730/MT
Cream is now substantially below the levels that created so much attention during the summer squeeze.
The August milkfat story was real.
But it was not permanent.
SMP remains different
SMP has now moved:
Event 410: +7.6%
Event 411: +5.3%
Event 412: +0.1%
Momentum has clearly slowed.
But SMP did not follow butter or mozzarella lower.
Our latest European physical Kudron Market Indication is approximately €3,250/MT.
That keeps me comparatively constructive on SMP, although with less conviction than two weeks ago.
The next question is whether SMP is simply consolidating after two strong events, or whether the buying wave has largely finished.
Cheese may be the clearest example of divergence
Two consecutive GDT events:
Event 411: Cheddar −6.6%
Event 412: Cheddar +16.5%
Meanwhile, mozzarella fell 6.0% at Event 412.
So saying “cheese is bullish” or “cheese is bearish” currently tells us very little.
The important questions are increasingly:
What cheese?
What specification?
What origin?
What delivery period?
And for which customer?
That is where physical-market knowledge starts to matter more than category headlines.
Białystok put the numbers back into perspective
Last week I spent two days in Białystok at the International Dairy Community Forum, speaking with Polish producers, cooperatives, processors and people from across the dairy industry.
It was useful to leave the screens and charts behind for a couple of days.
A recurring subject in many of my conversations was export markets.
Where can Polish producers find new customers?
Which markets are opening?
Which products are internationally competitive?
How should producers respond when different dairy categories are moving in opposite directions?
I had particularly good discussions with producers who are actively thinking about expanding exports and developing new markets.
And that reinforced something simple.
The dairy business is not ultimately an index.
It is factories, milk, people, trucks, contracts and relationships.
A producer does not sell “GDT −1.1%.”
They sell a particular product, from a particular factory, on particular terms, to a particular customer.
And sometimes the best commercial opportunities appear precisely when the headline markets stop moving together.
My Q4 view has changed
I remain more constructive on Q4 than I was in the middle of the summer.
But the thesis is narrower.
Powders: comparatively supported, although momentum is slowing.
Butter and milkfat: considerably weaker and now the largest challenge to the bullish thesis.
Cheese: increasingly product-specific and volatile.
European physical markets: still showing pockets of support, but no longer a simple one-way story.
Regional divergence: increasingly important.
That last point is where I am spending more of my attention.
When Europe, the United States and Oceania price similar dairy components differently, the question becomes less:
Is dairy bullish or bearish?
And more:
Where is the commercially usable difference?
While the International Dairy Community Forum was taking place in Białystok, the market did not stand still. Yet sentiment remained overwhelmingly bullish.
What the DDI needs to learn
Event 412 goes into the historical record as a directional miss.
Pre-event DDI:
62/100 — Bullish
Dear Dairy crowd:
88.6% bullish
Crowd-implied move:
approximately +1.82%
Actual GDT result:
−1.1%
Forecast error:
approximately −2.92 percentage points
Direction:
Miss
Modal poll bucket:
Miss
I want to continue recording these results without rewriting the earlier view after seeing the answer.
Over time, we should be able to determine whether the DDI, the Dear Dairy crowd — or a combination of the two — actually contains useful predictive information.
If it does, the data will show it.
If it doesn't, that is useful information too.
The question has changed
Earlier this summer I was asking:
Has dairy bottomed?
Then:
Is Q4 beginning to reprice?
After Event 412, I think the more useful question is:
Which dairy markets are genuinely tightening — and which were simply carried higher by the broader narrative?
That is what I will be watching next.
And after Białystok, I am increasingly convinced that useful market intelligence should do more than predict whether an index goes up or down.
It should help identify:
Where does the next real transaction make sense?
Dear Dairy.
Working in dairy?
Kudron Commodities works with producers, buyers and distributors across European and international dairy markets.
