Ian Huntley told a friend he believed Holly Wells and Jessica Chapman were dead, three days after they went missing, the Old Bailey has heard.
Ian Huntley is accused of murdering Jessica Chapman and Holly Wells
Salesman Martin Mahoney said he commented on "the awful business" when he called on Mr Huntley on 7 August about some cleaning materials.
He said to Mr Huntley that police would probably find them, but the caretaker replied: "No they'll be dead."
Mr Huntley denies murdering the girls, who vanished from Soham in August 2002.
His former girlfriend Maxine Carr denies helping an offender and conspiring to pervert the course of justice.
The two schoolgirls went missing after a family barbecue at the Wells' home on 4 August. Their bodies were found 13 days later in a ditch near RAF Lakenheath in Suffolk.
Mr Mahoney, who sold cleaning products to the school and knew Mr Huntley as Ian Nixon, told the court he went to show him how to use some floor polishing materials.
They were discussing the missing girls as they walked towards Mr Huntley's house, when the caretaker first said he believed they were dead.
Mr Mahoney said he then told Mr Huntley: "I have got three daughters of my own
and if one of my daughters went missing, you wouldn't give up after a couple of
He said Mr Huntley again replied: "No, they're dead", the court heard.
Under cross examination Stephen Coward QC, for Mr Huntley, suggested his client had said "as time goes on, you start fearing the worst, or words to that effect".
Mr Mahoney replied: "He didn't say that to me."
Earlier the court heard how Mr Huntley told a hitch-hiker that he was one of the last people to see the girls alive.
Robert Jeynes, who was picked up by the couple just outside Grimsby, said a conversation about the missing girls had set off alarm bells for him.
He said Mr Huntley mentioned a woman who had been on TV the previous
night and had "supposedly" seen the girls on the Monday.
Mr Jeynes told the court Mr Huntley said that before that woman, he was the last person
to see the girls alive.
Mr Coward suggested Mr Jeynes was mistaken in thinking
Mr Huntley had used the words "supposedly" and "alive".
Mr Jeynes replied he was not.
The hitch-hiker described Ms Carr's demeanour as "cold" with "no emotion", and Mr Huntley as "normal" during the 10 minutes he spent in the car.
The court then heard from a series of police officers involved in the search for
Sergeant Mark Barker, leading the search, told the court how, on 7 August, Mr Huntley had shown him round the school hangar but said he only had keys to one half of the building.
But the other side had been left unlocked so police were able to search the building, Sgt Barker told the court.
This was where the charred remains of the girls' clothes were found during a later search.
Mr Huntley denies murder
Mr Huntley told the officer the previous caretaker had been dismissed for a relationship with a student, and he believed this man may still have keys of the alarm code for the building, the court heard.
Sgt Barker also said Mr Huntley had told him he thought he was the last one to see the girls alive.
The officer told the court that during the search Mr Huntley asked "how long, how far, how detailed was the searching going to be".
Later the court heard how Mr Huntley had brought up the subject of DNA with a number of officers.
He asked Special Constable Michael Kerr what the police needed for DNA evidence, to which the officer replied "hair, skin cells or saliva".
Mr Kerr told the court he did not think it an unusual question as many people were interested in this subject.
Mr Huntley asked Special Constable Sharon Gilbert how long DNA could be used for.
She replied there was no timescale, the court heard.
Mr Huntley also told her he had seen the girls on the night they went missing and gave her a time which she believed was earlier than the one he gave when he later appeared on TV.
She said Mr Huntley had used the past tense when referring to the girls
throughout the conversation.
"All the time in this conversation that was ringing alarm bells," she told the court.
The trial was adjourned until Wednesday.