7 March 2024: Cause and Effect

Sweet whey drops nearly 3% to €680 (down €20) and skim milk powder falls 2% from €2410 to €2360. 

We are told sweet whey is now below the cost of production. We also found out there’s rather a lot of stock about. We know that China isn’t back in the spot market and probably not for the foreseeable. Therefore, it is a reasonable hypothesis for driers to cease production and switch commodities. Only skim milk is in the same muddle, as there are copious quantities being thrown at or below the market price, with increasingly large parcels of offgrade material coming out of the woodwork. Now the Dutch December figures have been published (I did tell them to pull their socks up when I was over there last week), production is back up to nearly 5000 tonnes, which while still lower than average, supports the higher stocking theory. 

So what is the least unpalatable solution for the processors? Stand idle or produce at a loss. The answer to that question will dictate the longer term trend for milk powders, but for the moment, until stocks are mopped up, it looks like further easing, which in turn isn’t encouraging buyers into anything but hand-to-mouth ordering.

Soya is taking a breather in the otherwise downward drift, and palm oil follows suit, as crude oil is broadly unchanged. So no excitement from background markets.

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

29 February 2024: Flat, Flat, Flat

Those are the words my French friends used to describe the milk powder market, much like the view from the Harwich-Hook ferry today, the tenuous link being the Dutch milk powder markets are unchanged (well, SWP is €10 lower). 

The mechanics behind the derivative products differ widely, as fat filled products have eased €30 this month, whilst WPC and milk protein concentrate have soared, despite the relative weakness in sweet whey. Wheat gluten remains ruinously expensive and hard to find, but is still cheaper than dairy protein.

The divisor is that while whey processors are adamant they’re united against falling into negative margins, the amount of skim milk powder, particularly downgrades, sloshing around, the unchanged headline price is suspiciously unchanged. This is usually a surefire sign of a significant downshift, so we may see whey stick while skim slides, but no weakness in derivatives.

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

22 February 2024: Gently bearish

Another week of mixed headline news, but more evidence of stocks coming out of the woodwork. Sweet whey slid €20, but skim rose €20, countering some evidence in the market. On the face of it, sweet whey is now at breakeven, according to the drying towers, below which they were reluctant to go last time, but withheld stock plunged the market to €540 last summer.

Despite the firmer headline skim market, downgrades are becoming more plentiful. And, the Dutch production figures for December confirm a modest increase in skim production after the lows in September that fuelled the autumn price increase.

Other markets are quietly lower, with mega soya crops due in both American continents and China still sidelined, buyers' expectations are for radically lower prices across the feed spectrum, and that sentiment is extending to milk powders.

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