6 July 2023: Milk powders ignore soya market on fire

In searching for this week’s picture, I was offered variously Trump, Biden, Johnson and even Sturgeon themes on the above, but my point is that milk powder markets seem to be fiddling while the Rome of global soya markets are on fire.

Why milks have decreased this week I know not, but they’re down; sweet whey a whopping 6% (€590) and skim milk nigh on 2% (€2150). Th last time we saw a 5 in front of the sweet whey price was November 2017, when skim milk sat at €1400. Then the intervention sting came in 2018, and the global supply/demand balance fundamentally changed.

This is in the face of the soy complex rising by upwards of 10% over the week. Beans, meal and oil are back in their ménage à trois characteristic of a weather market, rising in unison, soy oil climbing from 57 to 67 cents over the week. Palm oil has climbed a little over 4%, and even sunflower oil, which has been on a downward trajectory since the Ukraine invasion ($2340 down to $800) has put on 10% to $900. The fuse was lit under the soya market by a report from USDA that spooked fears that soya stocks would be exhausted before the US new crop is harvested, due to the El Niño phenomenon parching the Midwest.

Talk in the milk powder markets is essentially unchanged; no one can quite believe these numbers, especially on whey, and producers are adamant that demand will stifle any remaining oversupply in the near 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

29 June 2023: Milk powder mountain still visible

The tectonic plates of supply and demand are continuing to push up where they join, with the stockpile not tangibly reducing, despite brisk supply and demand.

Sweet whey reversed half of last week’s slump, up €20, and skim milk is reported unchanged at €2190. Not much to say on the macro ingredients, but there are decreases in other inputs, namely wheat gluten and palm fats. This is the result of too few processors in the marketplace hanging on to the highs in skim and whey and pricing their product unfavourably in least-cost formulation, resulting in full warehouses and expensive inventories. No doubt the revenge will come if skim and whey track higher in the autumn.

The soy complex is just that, and difficult to interpret. Things have obviously got more moist in the Midwest, as soya beans are down quite sharply this week, and meal has plunged also, leaving soy oil unjustifiably 10% higher. This is odd, given crude oil is down again, now sub $70 a barrel, so no support from biofuel, and palm oil is riding soy oil’s coattails on expectations that India will be dumping soy and sunflower oil in favour of palm.

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 June 2023: Expect the unexpected

Contrary to the usual MO, I want to look at the wider market before trying to make sense of milk powders. First of all, the daddy of world proteins, soya; US crop condition has fallen its the lowest level since 1995 at this early stage of development, due of course to lack of spring rains over the soya belt. Adding to that picture is slow export from Argentina’s principal export hub, unsurprising given the lower soya crop figure there. But Brazil’s mega 2023 soya crop will fill any S American shortfall and some, so any rains in the US soya belt will likely send the price south.

Soya oil and meal have done a do-si-do this week, with meal following beans sharply higher, whilst soy oil shed 10%, more to do with stabilised crude oil markets and following a slightly weaker palm oil market.

I can’t put off any longer admitting that I don’t know what is going on in milk powder markets. The bare facts are that skim milk has reduced by €30 this week (-1.35%) and sweet whey by a whopping €40, which is over 6% down. That is what reported trades are posted at in the headline Dutch market, but every processor, trader and industry pundit is howling about higher prices! The other bare fact is that sweet whey is now getting on for €150 per tonne below cost of production, so the moment processors can see the warehouse floor, they will likely recoup their losses, and some.

Sterling has seen a classic ’sell on rumour, buy on fact’ sting, as the unprecedented 0.5% interest rate rise just announced by the BoE has seen the heady heights of €1.18 give way to €1.1615 straight after the announcement. Contra trading, of course, but perhaps the prospect of an induced recession is weighing more heavily than the higher returns of holding sterling.

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