20 June 2024: Double vision?

I’ll admit diplopia is a new word to me, but the double vision I refer to is the fact there are two markets for sweet whey, the actual and the reported. Dutch markets are posted as unchanged at €650 for the fifth week in a row, but try going out and actually buying some, as sellers are bullish and asking prices over the market. Things are quiet in skim milk, with the market unchanged again this week, and certainly no discounting going on for off grades. 

A bit of a chart heavy week, but looking at the fundamentals behind whey and skim production, let’s look at a couple of sample indicators each. Whey first, price is holding stable for Gouda in the EU-27, whilst a sample chart for mozzarella production in Italy shows the seasonal pattern intact, so no immediate signs of supply or price pressure for whey, just bullish sellers.

Looking at skimmed milk, there was a sharp reversal in butter production in Holland during April, triggered no doubt by much more handsome prices. This hopefully indicates that the supply of skim milk is in balance with continuing brisk demand for milk powder blends, and therefore prices are unlikely to shoot up in the near future, but equally unlikely to decline significantly.

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

13 June 2024: Reached the top and had to stop?

Couldn’t resist referencing my favourite song from my favourite film, but after last week’s bullish feel, skim milk seems to have come off the boil, whilst sweet whey remains, you guessed, unchanged. 

Skim is actually posted down €20, but we didn’t get the offer, as the market is adamantly unchanged. Downgrades are still proudly offered at historically small discounts, but on the other hand although the Q2 Dutch production figures aren’t released, production is above the three year average. Balanced against this is demand, which is still increasing, with orders now out to three weeks production time even with a weekend shift being added, normally an autumn/winter necessity.

Sweet whey is interesting, despite the lack of change. Two strange factors; the lack of trader activity in the market and China is back in the market. Change is of course the lifeblood of the trader, as a flat market holds them out, but to see the market pretty much devoid of a middle market is unusual, unless they are quietly building stocks. China has sourced cheap whey from the USA, allegedly at $680, but we hear EU material has sold to Colombia at nigh on €900, which has traditionally sourced from the US, so as our colonial friends would say, ‘go figure?’ 

Sterling is worth a mention, as it has put on another cent over the week, not on poll readings but on UK wage growth putting the brakes on imminent interest rate cuts.

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

6 June 2024: Running out of steam?

Doesn’t look like it yet. Sweet whey posts unchanged again, but skim is only up €10. On the face of it, skim doesn’t look like the runaway train  it has been for the last fortnight, but don’t be fooled, as the squeeze does look genuine and not trader-stoked. 

Whilst cheese production is going flat out, there’s enough whey to meet increased demand. But the danger signs are there for skim milk, as downgrades have been offered recently at vastly reduced discounts, ergo there is less supply in the market generally. This is borne out by a steep decline in the production of butter.

As this is the basis for skim milk powder, it is hardly surprising to have seen the increases in price over the last month and equally, it is unlikely we will see any discounting soon. Quite where the production figures for April and May have gone isn't known yet but we've certainly seen the skim milk market lag behind this stark decline. So it seems fair to say that this market hasn't run out of steam yet. The graph below show skim well above the fifteen year average, but when the years dominated by EU Intervention stocks that ended in 2019 are taken out, the mid-€2000 price range looks like the new normal. 

Sweet whey on the other hand hasn’t been this consistently low since 2015, and is at if not below the cost of production, and is only there because of its byproduct status, held in balance by brisk cheese production, which is enjoying generally high prices (record for mozzarella). So if the cheesemakers remain blessed with high prices, it doesn’t look like whey will follow skim for the foreseeable future.

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