6 February 2024: Catch-up

Just back from a wonderful holiday in South India, and now busy getting ready for DairyTech 2024, but just have time to post here the Milk Monitors I wrote while I was away:

29 01 24: I'm on me holidays!

Only a short report as I’m in coffee country, Coorg, South India, visiting the old family coffee estate. The photo was taken outside St Philomena’s Cathedral in Mysore, where my mother was christened, and also my eldest sister and brother. Thought I ought to validate my history in commodities!

Nothing much has changed, whey is down €20, skim unchanged, soya even stevens, palm still surprisingly firm. The only comment worthy mentioning is an increase of downgrades being offered, which infers buyers sitting on their hands is working, and apparently milk supply has increased in January, blunting sellers’ aspirations.

01 02 24: Still on me holidays ...

This is the wonderful Ooty Express, the train that  served the old hill station that afforded relief for the families of the officers and civil servants of the Raj during the oppressive heat of the summer months on the plains. The rack and pinion railway climbs the 1 in 12 gradient mountainsides of the Nilgiri Hills, and anyone interested might enjoy an hour off watching this.

Back to business, and nothing much to report. Both skim and sweet whey were down €20, whey now €80 lower than the €820 posted in early December. One significant pointer is that skim milk production went through the bottom in November, but is still in intensive care.

News coming out of IPPE in Atlanta is contradictory, in that whey sales to China are reportedly increasing, but with a backdrop of pork prices plunging to $1/kg. The overall feeling is that buyers are sitting it out, whilst traders aren’t seeing enough arbitrage in a gently decreasing market. Prices should stabilise in February, but traders may take us off to the races after that.

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

18 January 2024: China Syndrome

Not the dreary 1979 film, where the gentlemen had bigger hair than the ladies, but more the lack of China in the current milk powder market model. It’s been almost two years that China has been pretty much absent from the milk powder market, as sluggish domestic demand from a near-stalled economy has lengthened the consumption of the expensive stockpile of whey powder. And without the Chinese dimension, the milk powder market can be said to be auto-regulated.

However, that cuts traders out of the game, and this week’s developments strongly hint at middle market meddling. We see 2.5% come out of sweet whey prices, and a whopping 4% out of skim milk. Fundamentals do not reflect this; processors say they refuse to process sweet whey at below €700 after getting their fingers burnt last year (their fault, withholding stock in 2022 when China was already out of the market), and skim towers are rightfully howling about the scarcity of liquid milk. 

So, muted demand balancing diminished supply was holding the market in balance, but somebody (and you know who you are, traders!) is breaking the vacuum by bidding the market down, to build a long book that can be cashed in when they turn the market sharply north. That’s my take, anyway. This manipulation is borne out by the dearth of downgrade skim offers in the market, when usually a bear market brings out the off-grades in droves. 

Looking at whey, permeate is still rising, and is at the usual €200 discount to where whey was last week, and whey protein concentrate is stable at €2150

So this week’s price reductions are modest and also indicative of the ‘real’ market.

Other markets are also-rans, soya is back down to last June’s lows, before the US crop suffered drought, and palm is having a love affair with itself, up to early December highs and ignoring cheaper mineral and vegoil markets. Other good news is that for once, Sterling is the least bad currency, with the uptick in inflation supporting interest rate stability.

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

11 January 2024: A battle of wills

2024 has started with a whimper, as the opposing forces of supply and demand sound louder. Sweet whey is quoted unchanged, but skim milk posting a suspicious loss of €40 this week

Sweet whey

Supply remains just the right side of profitability for processors, where they seem determined to keep it after last year’s self-inflicted crash. Cost of production list between €600-700 and liquid milk prices have ticked higher on reduced supply (minus 1-2%). China is still largely out of the market, as domestic demand is lacklustre and they are still chewing through expensive stock from 2022, but that is factored into current global pricing. Whey starts 2024 at exactly the same price as a year ago, after a flat Q4, with little sign of direction.

Skim Milk 

Like whey, skim starts the year at exactly the same price as 2023. Supply isn’t being thrown at buyers, and the €40 lower index price possibly represents a couple of distressed truckloads rather than a genuine slide. The significant reduction in production is met with more muted demand than seen in Q4, but with liquid milk prices rising again, price could trend higher into the spring.

Fat Filled Whey

FFW has increased again, as the few producers limit supply, cancelling out any chance of milk powder blends decreasing in the short term.

Wheat Gluten

The factory fire in Q4 coupled with an extended maintenance stoppage at another producer has impacted acutely on price and physical availability, as prices for spot loads have doubled since beginning of Q4.

Other factors

The soya market has drifted, as old crop bean exports are lagging, but soy oil is pretty much unchanged whilst the meal leg has softened, down from November’s $440 to the mid $360s. Palm oil, on the other hand, has followed its own fundamentals, propped up by crude oil reaming firmly in the $70 bracket.

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