15 December 2022: Things aren’t quite what they seem

The guitarists amongst you might admire the perfect F chord this musician is effecting (quite appropriate for what he allegedly said about business in June 2016), but playing the wrong side of the capo perhaps epitomises his style over substance.

And quite what has this to do with milk powder markets? Well, things aren’t quite what they seem there, either. Desperate long holders whose fingers were burnt months ago attempt to stabilise a market that still has the vacuum of muted demand. Opposing forces of a recent increase in spot demand and bean-counters wanting books square by year-end resulted in skim milk falling €70 (-2.5%) and sweet whey by €30 (-3.5%) over the past week.

The three legs of the soya complex have stayed rangebound this week, as has palm oil, so no pointers there, but now we have seen skim drop from the €4000 high in June to little more than €2500 in six months, one has to wonder if the hard landing isn’t approaching fast and might be followed by the traditional bull market in Q1.

We have seen a similar percentage taken out of sweet whey prices, peaking at €1450 in April to €850 today, so only just over the cost of production. But whey permeate is available at considerably below cost and still isn’t attracting more buying interest.

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

9 December 2022: The wisdom of W S Gilbert

When you have nothing else to wear But cloth of gold and satins rare, For cloth of gold you cease to care — Up goes the price of shoddy

This stanza from Gilbert and Sullivan’s Gondoliers is a wry look at relative values of commodities, but this week has seen some strange divergences.

Taking the two biggies first, both sweet whey and skim milk finally answered unavoidable fundamentals this week and fell 2% (-€20) and 6% (-€180) respectively,

We’ve done to death the reasons behind this, and it doesn’t look like it’s over yet, but what is interesting is the effect the other ingredient that goes into the milk powder mix is having on pricing, namely vegetable protein. These have been cheaper than dairy proteins for pretty much ever, but rose in line with dairy proteins as the commodity world went through the roof. Wheat gluten rose from €1450 to €3250 and it's still there, ostensibly by milling wheat prices holding up, but manipulated by too few producers. So the former cheap option in milk powder blends is now the dearer and allowing the dairy farmer to trade up to higher dairy protein milk replacers for a smaller premium than previously.

Talking about vegetable proteins, it’s been an interesting week in soya and palm. Soybeans are pretty much even over the week, but meal has put on $40 a tonne on buoyant exports, whilst soya oil dropped from 74 to 61 cents on the back of a sharp reduction in requirement to incorporate it into biodiesel. Palm oil has shrugged off reducing production and solid export demand to fall slightly on an EU directive limiting sourcing agricultural produce from deforested areas.

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

1 December 2022: Holding up the markets

This week’s milk powder markets are identical to the England:USA game in Qatar; a no score draw with little worthy of comment.

Both sweet whey and skim milk posted unchanged prices, but the underlying fundamentals remain weak. Off grades are still plentiful, but slightly less whey is being put on the market. Skim milk is easily available, but what is notable is the resistance of both processors and traders to take any more pain by discounting a market that buyers are expecting to collapse a deal further.

Fat filled product has eased minimally, but again there is no appetite to discount by the very few players that control the market.

Soya has had a firm week on beans and meal, sentiment driven by imagined demand from a further vaccine rollout in China, but both palm and soya oil have dipped in the last couple of days. Palm production has slowed, and exports from Indonesia have ticked upwards, but no signals have emerged of impending hikes in either market.

Sterling has bounced today on the back of cooling in both the Fed’s rate hike intentions and Eurozone inflation.

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