28 July 2022: Sweet whey future price graph?

I stand by last week’s comment that the mid August rush back to work will probably ignite the traditionally bullish autumn market, and this has been evidenced by this week's unchanged price for sweet whey on the headline Dutch market, and a €15 increase in Germany. OK, skim milk has fallen an impressive €100 over the week (-2.7%), and whilst processors howl that they’re short of liquid milk, and stumping up ever higher numbers to secure supply (50p/l now in UK), there seems to be spot oversupply of skim milk powder.

As previously suggested, this may be the backside of processor greed, chasing the market to record levels before releasing stock that was deliberated held back to starve the market. Of course, buyers of skim based product have held back as prices fall, but the market has fallen less than 10% since the April highs, compared to the nigh on 40% collapse in whey, and if the post holiday purchase jamboree starts, processors and especially traders will have no problem turning skim prices north again.

And please watch background markets, as the soy complex has risen sharply for beans, stayed muted for oil, but broken the record for soymeal, which is just breasting $500/tonne, on the back of extreme heat and drought in the midwest. Palm oil has enjoyed a comeback, supported by Black Sea vegoil uncertainties, and coconut oil is remaining stubbornly in the $2500-3000 bracket (currently $2650).

Putting all lot into the pot and stirring it suggests to me that milk powders will follow the herd north, and I repeat my mantra, owning bookings will be more valuable than picking the imaginary bottom of the 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

21 July 2022: Sell in May and Go Away?

I’m conflicted about this adage, specifically for feed raw materials, as ‘Buy in May and Go Away’ usually delivered for winter cover in eight out of ten years, before Peak Oil ripped up the rulebook. But this year, specifically for veg oils, and milk powders by association, shorting the market has yielded rich pickings for the brave.

Scant end user demand has allowed sweet whey to drop another €30 (-3%) and skim milk by €50 (-1.5%) this past week, and trader sentiment is that it could well fall moderately into early August, but beware, the curse of the summer holidays is nigh. Traditionally, when a slumping market is helped lower by what my old boss used to call ‘masterful inactivity’ (and he told me recently he reads this rubbish!) going into the summer break, there’s usually a nasty surprise lurking in the first week of September. There’s suddenly a rush to cover Q4, lead times shoot out from two weeks to six, and rocketing physical demand is mirrored by commensurate price rises.

I believe there is significant current buying activity for skim milk powder and especially sweet whey, but it's the middle market traders filling their boots, whilst end users blithely expect the slide to continue and sit on their hands. Let’s face it, sweet whey price is now below one year ago, and that was before poor northern and southern hemisphere soya harvests, food inflation and Ukraine. I genuinely fear that before the end of August, owning physical bookings will be the bird in the hand, rather than the two in the bush of yet lower prices.

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

15 July 2022: Down the plughole ...

What a week, and an embarrassing one for this observer's prediction of the market levelling out; skim milk down 1.5%, but sweet whey down a whopping 7%. The sweet whey market graph is most interesting as it shows the steepest dive in recent memory, and is set to undercut the 2021 trend line.

The very bottom line on sweet whey is currently €500, the cost of drying, but with zero margin and reliant on dear cheese prices, so unlikely to happen. Skim milk is of course much more muted in its decrease, as liquid milk supply remains in deficit, and processors and middle market operators are adamant it cannot fall much further in the current cycle.

Looking at background markets, vegetable oils have led the slide, soya oil down to 57 cents from highs of 80 cents in April, and palm oil absolutely plummeting, down to 3,700MYR from the peak of 7,000MYR, so yes, nearly a full 50% slide in value. One remarkable fact is that the Indonesian Government is legislating for 30% of palm oil to be included in biodiesel buy the end of July, so desperate are they to cancel out the stockpiling that was caused by the ill-judged export ban in April.

The global supply/demand cycle that constricted supply so violently is now playing out with equal strength on the demand side.

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