Welcome to the BDC agri blog. Here you will find reports from some of the events we attend, as well as Greg's popular weekly view of the UK milk and whey powders market:

 

"Many years ago, I got my first job in the dairy industry, as class milk monitor at Tollesbury Primary School.
I thought it was a job for life, but sadly Margaret Thatcher famously ‘snatched’ free school milk,
and the nation’s health has suffered since. Fifty-four years later, I am still musing on the dairy industry,
with an irreverent view of politics and currency ..." G
reg Dunn


It seems the entire milk processing industry has conspired to make me look a gibbering fool (not at all hard to do), by posting unchanged prices this week. The Dutch sweet whey market is allegedly €20 lower, but no sellers I’m aware of have discounted prices yet.


The significant fact is that whereas even producers were completely sold out last week, suddenly they’ve found spot production and are offering material again. This will no doubt upset the Arthur Daleys in the middle market, as they’ve only been able to secure minimal tonnages to sit on while running the market as high as they can, but it should indicate this bull run is running out of steam.


Sterling is basking in the headline news that the UK economy is expected to bounce back strongly in Q2 because of the vaccine rollout, but the solid basis for today’s strength is the BoE left interest rates unchanged, against rumours of a move to negative interest.


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

The market is raging. Whey is up €60 and skim a full €100, 7% and 5% respectively. Rather than write reams, I’ll list reasons by bullet point:

  • Cheese producers for catering have severely scaled back production because of restaurant closure. Whey from mozzarella production is most seriously affected.

  • Chinese imports continue at high level

  • Liquid milk collections are down by 1.5-2% - cold weather, high feed costs, poor returns

  • End users put off Q1 purchases, and have returned for spot supplies, exacerbating the rise

  • Demand for animal feed use remains strong, despite dire market prices for pork across Europe

  • Middle market traders are ratcheting the spot market higher, outbidding consumers and sitting on long books

  • A major supplier of an alternative product (acid whey) is having difficulty sourcing liquid serum

My prediction of mid March before the market will break requires revision, probably into April or beyond, as long as restaurants stay shut and extant animals need feeding.


At least the pound is exploring giddy heights not seen for a six-month or longer, buoyed by the lower than expected rise in the UK jobless figure.


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

Two days after Blue Monday and not much sign of cheer, so let’s start with the one scrap of good news; sterling strength. The pound has climbed to multi month highs, possibly on stronger inflation than predicted, if the old rules of interest rates being used to manipulate inflation still apply. Sterling has been fundamentally underpriced throughout the second half of last year, so should continue to strengthen as inflation increases through the first quarter.


The bad news is that whey is up close to 5% week-on-week, and skimmed milk powder by 2.5%. As dairy farmers have faced 20-30% hikes in feed costs and not a pfennig extra for their milk, production has been reined back, exacerbating a spot supply situation, and with the middle market and producers hoarding spot material like lockdown lavatory paper, the €50 hike in both whey and SMP powders reflects the few physical trades that have taken place. Spot whey is literally unavailable, so blenders are in an invidious position of scouring further afield to obtain physical stock.


This situation is likely to remain in place deep into February and could easily extend into Q2, so possession of stock seems wiser than second-guessing a price collapse


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