2 March 2023: Creaming off the profits

The numbers are out of date, but the balance illustrated above still holds true. And while liquid milk prices fall across Europe, skim milk is counter-trading, up another €30 this week, now €130 higher over the last month, or 6%. On the face of the headline price, one would expect CMRs to be increasing, but in the macroeconomics of global skim milk, the largest dairies mostly have milk replacer business to downstream their downgrades in house, and so discounted material is still freely offered at unchanged levels. The momentum behind the headline price rise in skim is probably the recently announced 60,000 tonne sale to Algeria, but taking that big a chunk out of the market still hasn’t frightened the horses.

It’s interesting to see that prices exactly mirrored February 2022, when the world changed, and didn’t go bananas until the autumn, unlike the veg oil markets, particularly sunflower oil. Actually, that is an interesting one, as the price of sunflower oil has crashed from the Ukraine crisis level of $2400 to little over $1000, whilst soya and palm oil have shown far more modest declines. Soya is still well overdone, with a mega Brazilian crop about to weigh on the market, and the global economic slowdown being ignored, and palm oil is still buoyant, with danger-level rains reported in Malaysia.

Sweet whey had another flat week in a flat month, at lower than cost of production, but more available than sluggish demand is calling for, so a market drifting, rather than being in balance.

The consensus is that the CMR and milk powder raw material market will continue broadly unchanged in the next weeks, but no one expects an imminent decrease. Whilst dairy farmers have seen 20% plus come out of peak milk price, input prices remain at market highs, so I see falling milk production beyond the flush of spring milk in Europe, and processors looking to recover more from skim and whey.

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

23 February 2023: Market's moved, buyers unmoved

Apologies for absence last week, laptop malfunction whilst on the road in Ireland. Not that prices have changed much, but the mood amongst sellers has.

Sweet whey has flatlined for the whole of February, after touching the bottom €10 lower in the last week of January. Skim milk, however, has been stealthily climbing 4.5% in the last fortnight. Market intelligence doesn’t confirm wholesale buying interest, perhaps too many long and wrong books still being worked off, but what has definitely changed is sellers’ resolve to drive both markets higher.

Talking round the market in Ireland, forecasts there have liquid milk prices down a third from a high of 60 cents plus, when the flush of spring milk hits, and with 90% of dairy exported from Ireland, they’re a key market indicator. Lower milk prices don't directly translate into dearer skim, but the fact that processors have turned the slide around in skim to the tune of nearly 5% is indicative that there is likely more to come, to the relief of red-faced middle market long holders.

Whey is peculiarly not showing any sign of an uplift, but sellers that were throwing any amount of tonnage at a buying enquiry have become a lot less humble, and we all know traders hate a flat market.

Skim milk has mirrored vegoils, with both soya and palm oils up about 5% over the week. The whopper 150mt Brazilian soy crop is balanced off by a 60 year record drought in Argentina, exacerbated by early frosts, and the old chestnut of increasing demand from post-covid China is still being wheeled out. Palm oil exports have rocketed from Malaysia this month, and production trimmed back by tropical storms and flooding disrupting harvesting. Indonesia has also increased its biodiesel demand from palm, and supply/demand is complicated by Ramadan and Eid.

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

10 February 2023: Rock bottom?

Finally, after a surprising collapse in sweet whey and skim milk, the market seems to have turned. Sweet whey is up 1.5%, only a modest €10, and skim milk posted unchanged levels.

What this has done is brought out the buying community, who can’t quite believe whey has plunged so far below cost of production. There are certainly some burnt fingers in the middle market, long books bought on the way down with averages well above today’s headline figure, owned by traders keen to turn a rout into a profit, so I suspect awakening purchasing interest will be met by processor and trader alike, keen to make buyers chase the market higher. I stress this is very much a personal view, wiser heads predict only a soft increase, but no one expects further discounting.

Skim milk is perhaps in less of a bind, as it still sits at €2260, and nominally above the cost of production, so we may not see quite so much upward pressure. But milk powders now seem disconnected from the vegoil markets, which are broadly unchanged over the week.

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