Greg's Milk Monitor 17 October 2024: Traders' Paradise

Both milk powders down €30 this week, whey by 3.3% and skim by 1.2% as traders buy in their short positions and put the screw on processors, who have to their utter surprise found copious stocks that just weren’t visible a fortnight ago. Both commodities look set fair for further declines, but other processed powders are proving stubborn, as fat-filled whey is still at record price levels with little chance of a break and gluten is stuck at €2200 with rumours of shortage.

The other factor limiting blends declining is a surprise shortage of delactosed whey, which puts €10 on milk replacers.

Regarding my obsession with butter and the price frenzy, it appears production in August did fall back within seasonal trend line, so the skim milk stockpile isn’t growing exponentially.

The US soya harvest is going gangbusters, 15% ahead of the 5 year average, and planting conditions in Brazil have improved, which has brought beans below 10 cents for the first time since August, but strangely left meal and oil broadly unchanged, especially since the heat has come out of crude oil markets for the time being.

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

Greg's Milk Monitor 11 October 2024: Careful Now!

Not quite time to say Mass for the poor milk producers who have exceeded the speed of price rises and caused an explosion in unsold stock, but it might come to that. Skim milk has dropped €50 this week (-2%), and sweet whey €10 (-1%), but the two markets remain very different in terms of supply, whilst both having the same fundamentals. 

Taking skim first, it is clear that old stocks, and I don’t mean downgrade material, have been sitting in store whilst processors rode the price wave higher, and are now having the cobwebs dusted off and being thrown at a market largely devoid of buyers, who rightly smell blood. One simply can’t have sustained price hikes for the product (butter) and the by-product (skim) when the raw material cost remains pretty much flat.

Which brings us on to sweet whey, which has the same fundamentals (higher cheese price and byproduct), but no sign of the burdensome stocks. Yet. 

There is still genuine difficulty in finding spot whey supplies, and although there is a stark €75 price differential between Netherlands and cheaper Germany, this is not indicative of actual offers in the market. 

Other markets are surprisingly supportive, as sunflower oil is nigh on 50% higher year on year, and at a two year high, palm oil is close to a three year high (the bonkers plan for 50% biodiesel mandate in Indonesia next year) and coconut oil is sharply higher. 

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

Greg's Milk Monitor 4 October 2024: Utterly buttery

Finally, we see the skim market break, whilst whey is held unchanged by its fundamentals.

Skim milk has slumped 2.7% this week, and no surprise, as the butter market is flying and the skim byproduct is piling up, as predicted. In parts of Europe, butter has hit a recent high of €8K as producers scramble to get enough milk, as their Christmas has come early. EU production figures aren’t out yet for August or September, but there was an unseasonable spike in July which it is reasonable to expect to have extended into the third quarter.

And you can see why, looking at the price of butter going through the roof, no wonder there’s more skim being thrown at the market than even the strong autumn calving market can soak up.

Whey on the other hand is more muted in its fundamentals. Demand for whey powder remains strong from the global feed sector, but supply remains equally brisk, with record production of European hard cheeses and stable prices keeping the market in balance

Other markets are stable to higher, Hurricane Hélène didn’t do much for those expecting lower markets, with meal up $30 over the week, but soy oil remained pretty much stable. Brazil is a couple of percent behind last year’s record planting pace, but has ample time to catch up. The odd one out is palm oil, which chose to follow crude oil up 5% on geopolitical pressures (I bought my domestic fuel oil for the winter today, a sure sign that the market will fall out of bed) 

Sterling had a weak day after the BoE boss suggested easing interest rates rather more vigorously than expected, but single handed out of intensive care at the time of writing.

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