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    © 2018  Black Diamond Commodities Ltd.

    BDC agri is a trading name of Black Diamond Commodities Ltd, UK Registered Company No 06821585,

                                                                                        

     

    Welcome to the BDC agri blog. Here you will find reports from some of the events we attend, as well as Greg's popular weekly view of the UK milk and whey powders market:

     

    "Many years ago, I got my first job in the dairy industry, as class milk monitor at Tollesbury Primary School.
    I thought it was a job for life, but sadly Margaret Thatcher famously ‘snatched’ free school milk,
    and the nation’s health has suffered since. Fifty-four years later, I am still musing on the dairy industry,
    with an irreverent view of politics and currency ..." G
    reg Dunn

    This is the hardest commentary to write, as the only fixed point in the market is exchange rate, which in the case of sterling is a horror story.


    In short, there is no market, as in barely no physical trades reported and quoted prices are basically opinions of where the market might be.


    Skim is quoted as much as €200 down on the week, and whey by up to €50, and on the face of it, that should translate into enormously lower prices, if your purchase currency isn't GBP.


    The reality is skyrocketing logistic costs, as borders are closed and workforce pressures make physical delivery very difficult. This affects Lacto Production acutely, as they are a blender/processor/packer, so their inbound raw materials are affected as much as deliveries out. It is therefore no surprise to see the commodity markets in free fall when physical possession is the real problem.


    Watching sterling fall three clear cents in ten minutes yesterday afternoon is a sight I will remember for a long time, if I'm spared. This is not a time for levitous political comment, but the best analysis of sterling's weakness I have found is summed up in this soundbite: 'In short, sterling is particularly sensitive to global investor meltdowns.'


    BDC agri is the UK broker for Lacto Production milk and whey powder products.

    For further information and prices, contact Greg Dunn on 01206 381521 or g.dunn@blackdiamondcommodities.com

    Sit tight, this one's a long one.


    In summary, the market is in free fall on skim, and being followed by whey, and dangerously so. Pricing websites are struggling to confirm actual trades, buyers stand out and the whites of the eyes of the producers are starting to show.


    True, the skim market should be in free-fall, given the way it was artificially hiked throughout 2019. But overlay the effect of coronavirus on pretty much every market other than gold, and we have the dangerous situation of large-scale milk processing capacity potentially being mothballed and prices being marked savagely higher before production is restarted.


    These are, of course, unprecedented days, but old trading adages still hold true; 'be fearful when everyone is greedy, and be greedy when everyone is fearful' and 'the market can remain irrational longer than you can stay solvent' come to mind. Of course, the opposite 'danger in catching a falling knife' is equally true, and the buyer's angst is exacerbated by inactivity in an unjustified bull market and equally by buying the market down.


    In brief, whey is down €20 in France and €30 in the Netherlands (-4%) and feed grade skim milk is down a whopping €80 (-3.4%).



    Dominic Cummings' first budget, delivered by a twelve-year-old who has nearly four weeks' work experience, was all about 'getting it done'. But once the crackle of the soundbites fade, the market decides, and the pound is currently sinking to levels last seen in the darkest 'no deal Brexit' days of last summer.


    True, slashing interest rates by two-thirds played a part in sterling's demise, but dressing up what is undeniably an emergency budget as a carefully costed bonanza for the northern man in the street is transparent.


    BDC agri is the UK broker for Lacto Production milk and whey powder products.

    For further information and prices, contact Greg Dunn on 01206 381521 or g.dunn@blackdiamondcommodities.com

    Updated: Mar 5

    The market has pulled the ripcord on the parachute and descent has slowed somewhat, at least on whey. Skim is down a whopping €90 on the week (-3.7%) but whey has only shed €10 (-1.3%), so we could see the bottom of the whey graph ere long. Skim is arguably the softest of the two markets, as its fifteen month climb was artificially engineered. Quite how the virus pandemic will drive milk powders is hard to call, as the backdrop to falling consumer demand is unlikely to follow through in animal feed demand in the short to medium term, and a reduced workforce is arguably a bullish factor. However, the fall in the markets has coincided with the global spread of Covid-19, and the virus is still being cited as the main reason for the slide in milk powders.


    Currency is interesting at the moment, with the precipitous drop in the Pound being blamed on the mere possibility of easing UK interest rates, whilst the US$ rode out their actual interest rate cut with barely a wobble. When the global economy is reckoned to drop by 1.5%, it makes no sense for the Pound to take the beating it has suffered last week and this. Its next direction is likely to be influenced by the opening round of trade talks with the EU, so the next move will probably be further down; classic ’sell on rumour, buy on fact’.


    Our current global woes of pestilence, bush fires and tempest is a bit like watching the Old Testament on catch-up …


    BDC agri is the UK broker for Lacto Production milk and whey powder products.

    For further information and prices, contact Greg Dunn on 01206 381521 or g.dunn@blackdiamondcommodities.com