8 September 2022: A balanced market? I am starting to think not

Headline prices for both whey powder and skim milk are quoted as unchanged this week, after consistent rise through August. Associated markets have eased, with the soy complex drifting lower with meal as the weakest leg (down $20/t) and palm oil matching the mid July low, and stocks building like topsy, now over 2 million tonnes in Malaysia, ahead of peak production and poor export prospects.

The world view seems to be that global economic turmoil trumps northern hemisphere drought, or in other words, demand will reduce even more than supply. This seems rather facile, given that food demand is not as variable as demand for consumer goods, and China still has its buying boots on for soya imports this autumn.

What has definitely emerged this week are large scale offers of skim milk powder, so we could see some significant discounting in the near future, but my friends at Lacto Production see this as a delay of the autumn hike, and we will probably see the market march north by the end of September. However, I’m becoming doubtful about my previous conviction that milk powders will continue to spiral upwards, as the supporting markets in vegoils and proteins are looking overdone, so the whole edibles market should dictate the direction of travel of 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

1 September 2022: Up we go?

Up we go? Sweet whey posted an impressive 4% gain this week, up €40, on top of the €30 rise from the low of €900 of mid August. Skim milk followed the upward trend, chalking up another €50 (+1.4%), but the post-holiday rush to cover hasn’t kicked in universally yet, apart from brisk buying in Eastern Europe.

The below graph doesn’t yet show the uptick, but is interesting in that the August graph is identical for the last two years, and both 2020 and 2021 experienced the autumn hike. Chaos theorists (remember them?) might argue that there is no pattern, and whilst physical supply is ample, it has to be said that it is processors and traders who are urging the market higher.

Supporting indices signal mixed messages, as palm oil is on the downtrend, as burdensome stocks are added to by peak production months in SE Asia, whilst soya oil is the current champion of the soy complex, some 5% higher this week whilst beans lost a dollar and meal also drifted lower. Global economic woes weigh on the demand side of the scales, although China has ramped up soya imports ahead of autumn festivals.

Currency is worth a mention, as the dollar:euro waltz around parity, and the poor old pound is bewildered by the desperate promises of the two continuity Borises and languishes at what is hopefully the lower end of the current cycle.

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

25 August 2022: Has the worm turned?

Having beaten myself up for the premature call on skim milk, I now feel more vindicated as the market appears to have bottomed out, rising €70 (+2%) this week. The firmer call I made on sweet whey is robust so far, up another €10 and now a cumulative 2% higher than the flat July market. But then I had to be right sometime!

Not much else to report; both palm and soya oil indexes remain broadly unchanged, but the trading range in soybeans has been a whole dollar per bushel higher over the last week, with the soymeal leg absorbing the rise, up $40 per tonne.

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