16 June 2022: Ploughing its own furrow

Last week’s prediction became this week’s fact; sweet whey has turned north again, following its dearer sister skim milk into higher price territory, whilst the rest of the oils and proteins basket had a quiet to lower week.

Traders’ love of arbitrage probably hiked sweet whey, as offers at lower money suddenly dried up and processors sniff higher prices and withhold stock.

Statistics this week are sweet whey up €20 (+1.5%), skim milk rises €50 (+1.3%), but soyabeans and soya oil both eased a good 5%, with only meal posting pretty much unchanged levels. Palm is an interesting story, as the Indonesian export ban in April has bit them in the bum, as stocks have built to the degree that they’ve slashed export taxes in order to get some tank space. The result is the palm market is down a good 20% from the early May highs, and looks as though it may fall further in the short term.

Chronic supply issues have eased on derivative products such as wheat gluten and fat filled whey, but not one pfennig has come out of prices, which are still at record highs.

Today’s BoE increase of 0.25% on base rate interest has saved the bacon of sterling, currently trading 2 cents higher against the euro.

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

9 June 2022: Milk powder divergence

I don't buy into all this chartist nonsense, but we are definitely seeing a consolidation of the divergence between sweet whey and skim milk prices over the last week. Whey records a 2.5% drop (-€30), but skim posts a strong €60 hike, up 1.5%. Physical supply reflects this, with traders throwing whey at consumers, but playing much harder to get on skim milk, to the degree that all but €90 of the €230 drop witnessed in the last month is now eradicated.

The soya complex has had a quiet week, similarly palm oil, but one interesting fact is that sunflower oil prices have retreated from the highs in March of $2400 to $2000 (pre Ukraine conflict $1400), and the whole bull run in vegetable oils was built on sunflower oil shipping restrictions.

The divergence is unlikely to continue, given the reduction in liquid milk supply and higher farm gate prices being paid should support both markets, so I suspect we will see traders turn sweet whey sharply north the moment they get a whiff of import interest from China. The skim hike has brought buyers scurrying back into the market, so the uptrend in skim looks to continue for a couple of weeks yet. Traditionally, we see the post holiday period as the pinch point when prices rise into the autumn, but this is no ordinary year, so anything purchased now looks likely not to be an embarrassment by the time the order is fulfilled.

Sterling looks as bad as if the Queen had asked Paddington Bear to form a government.

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

5 June 2022: Skim milk half empty, whey half full?

Back to work after an enjoyable platinum jubilee, and markets are all over the place. The lack of milk supply is still forcing the wedge wider between skim and whey, with whey dropping a notional €10, whilst skim increased €50 for the second week running. Shanghai emerging largely from lockdown hasn't stimulated the Chinese import demand that was widely expected, with last year's stock building at far lower prices still sitting in store, and European supply of whey is freely offered.

This is not the case for skim, however, with traders strangling spot supply to lever their books back into the black. Buyers still haven't returned to an admittedly confused market, and despite an easing in coconut oil prices, physical supply is still tight. WPC and wheat gluten remain particularly difficult to source. Unless there is a global soft commodity slide, I can't see the milk powder market falling in the near future.

The rest of the oil commodity basket is steady, with soybeans and soya oil holding firm while meal dipped $30, and palm oil drifting lower, as Indonesia's return to export isn't that significant and Malaysia is suffering a plantation labour shortage similar to the lack of bank holiday air traffic controllers.

One surprising, but useless fact: Gold, formerly the ultimate safe haven in times of global tumult, has actually lost 2% year-on-year. The mighty greenback has been the refuge so far in the current crisis, firming against the euro, and leaving the pound in the dumpster.

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