18 August 2022: Still half right…

I think my crystal ball needs a polish, as the two milk powder markets are now diverging, counter to my recent musings. The sweet whey market has responded to my market call by rising a modest €10 per tonne (+1%), but this is pyrrhic compared to a further drop of €70 (-2%) in skim milk price.

Supporting indices have had a quiet week, so no outside stimuli, but it is worth noting that whilst whey is cheaper than this time last year, skim milk has now fallen to its lowest level this year. It is also worth pointing out that the real world prices of provisioning a milk powder factory are all over the place, and not mirroring the surprisingly cheap prices quoted on the Dutch headline market.

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

12 August 2022: Half right, half wrong…

Last week’s call that the market had bottomed was debunked by the headline skim milk powder index falling €100, just shy of 3%, but the sweet whey market has maintained its unchanged status for a whole month now. Supply is plentiful on all products, even the hitherto unavailable fat-filled whey and hydrolysed wheat gluten, but the headline price drop in skim milk is a little ingenious, as physical supply isn’t widely offered at the lower price.

What continues to be a concern are the protein and oils markets. The August soybean futures contract yesterday breached the recent record price posted on 24th February, and we always remember what happened that day. The contract is shortly going off the board, so that hike was exaggerated, but over the last week we have seen 150 cents up on beans (+10%), 7 cents on soya oil (+11%) and $30 on meal (+9%). Palm oil has followed, up 10% with Malaysia increasing palm exports by 10% in early August, but largest producer Indonesia has yet to reduce stocks.

My reading is that whilst anything could and probably will happen, whey processors are paying record high prices for liquid milk, and charging pretty much commensurate prices for cheese (I have used a Gouda price above for reference), so why is sweet whey cheaper now than this time last year? Equally, what are the downward pressures acting on skim milk powder that ignore the upward march in liquid milk prices, that are being further exacerbated by European drought forcing farmers to rein back on production even further?

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

4 August 2022: That's All, Folks?

Well, I think it is - the decline in the milk powders market, that is.

Both sweet whey and skim milk are posting unchanged levels this week, in thin market activity usually associated with early August. The main rider to my conviction that we are seeing the bottom of the market for the next quarter at least is that both sweet whey and especially skim are now being thrown at blenders, so spot supply is plentiful, something we have not seen since processors starved the market so much higher. The core of my argument is the surge in buying activity Europe-wide, triggered by the post-holiday rush back to work.

Background markets are taking a breather; the soya complex has drifted lower on continued bullish weather during the pod development season, but bearish export news, with Chinese soybean imports down some 23% YOY. The Indonesian Government has cracked the whip on palm oil exports, increasing the export quota to nine times domestic sales, up from seven, largely in response to a paltry 1% increase in exports during July, whilst stocks build faster. Grains are caught between drought fears and the easing of grain and fertiliser exports from the Black Sea.

Prices remain unchanged this week, and interest is growing in securing orders going into September, and thus the value of bookings may become greater than a rock-bottom price

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