16 June 2023: Hot, hot, hot

I will admit my perspective is strongly influenced by my location this week, but the remarkable experience of searching for some shade from the intense heat of the midday sun on a Herbridean island yesterday chimes with my findings from news gathering from the global agri markets. The world, it seems, is on fire.

But first, milk powders. Both headline markets are showing reductions after weeks of increases. It must be stressed that there are still cheap deals around, but only for very prompt delivery, and anything with a Q3 label carries a steep premium, and Q4 exponentially more, if offered at all. UK production of sweet whey has been priced upwards by stronger sterling increasing export prices, and edible premiums are being pushed higher in Holland and France. So there is great nervousness in the market going forward, exacerbated by the prospects for global soya and corn.

Starting with soya, El Ñino has spooked the soya market in the Americas, with beans up 100 cents and oil up from 46 cents to nearly 60 cents since the beginning of June. Meal has stayed flat as a pancake, as biofuel has stoked the rise, with mandates for 2023-25 in the US due, and corruption charges in Indonesia over illegal exports of palm oi has driven the Malaysian market sharply higher.

Sterling strength has taken the edge off things, as the markets concentrate on the more tangible factors of interest rate relationships rather than the (let's hope) end of the experiment of celebrity government.

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

8 June 2023: Newton's Third Law ...

… concerns equal and opposite forces, but our milk powder markets remain in balance despite the force for increase being the greater. Allegedly.

The situation is this, sweet whey and skim milk both posted unchanged levels this week, but processors are still saying ‘how much do you want?’ and traders broadly saying ‘buy now and avoid the rush’. For sweet whey certainly, there is no commercial downward pressure, as it is so far below cost of production, but skim milk could theoretically ease. Quite when the warehouses will empty is the question, as demand is definitely eating into the stockpiles, but however desperate both processors and traders are, both markets have bottommed out for a couple of months now.

Wheat gluten has eased significantly recently, another victim of a controlled market of too few producers pegging prices at an artificially high level, and then playing catchup by offering bursting warehouse inventories more cheaply.

In other markets, OPEC trumpeting cutbacks in crude oil production has lifted soy oil by 10% in the last week, 46 cents rising to 51 cents, but palm oil has followed its own fundamentals for once, as India has been cancelling edible palm contracts in favour of cheaper soy and sunflower oil.

Sterling seems to be hanging on to its gains against the euro, on the strength of interest rate pressures either side of the Channel.

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

2 June 2023: The times, they are a-changing

… but slowly.

Sweet whey rises 3% (up €20) and skim milk up 1.5% (up €40). That’s the headline market, prices provided by sellers to news-gatherers, allegedly for actual trades, but perhaps they’ve been selective.

At the sharp end of the market, the same contra-indications are still at play. Sellers are initially asking for an increase, but there are seemingly more of them about and knocking on doors that they don’t usually service. So the stockpiles are still there, even with more brisk demand. But the salient feature is that both markets have apparently bottomed, not surprising for whey at €100 below cost of production. So it’s heads it’ll stay unchanged or tails it’ll rise. This vacuum may limp through Q3, but we are likely to see the traditional bull run when executives return from their vacation to a bare cupboard and buy, buy, buy.

Crude oil is now below $70 a barrel and dragging vegoils down with it. I note the Chicago July 23 soya oil contract topped out at 75 cents near exactly a year ago, before a bumpy ride down to today’s 47 cents.

Sterling seems to be less sick than of late, as the prospect of higher UK interest rates will be needed for longer to curb inflation that is running over 2% over the Eurozone.

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