21 April 2022: Market overdone?

Much as I'd like to think so, the underlying reduction in milk supply doesn't support the hypothesis.

Let's do the good news first, limited as it is. Both skim milk and sweet whey have finally posted lower numbers, only a humble €10 per tonne fall, but the first time we've seen red figures this year. This hasn't fed through into cheaper offers of physical product yet, and there's certainly no sign of a impending sell-off, but it does perhaps presage stability for the next few weeks, geopolitics notwithstanding. Palm oil has come off the boil, and whey protein concentrate has patchy availability, for a handsome price. Hydrolysed wheat gluten remains

It all boils down to liquid milk. Globally, both milk and cheese have been hiked 30% higher so far this year. Milk producers were reining back feed rations long before the Russia/Ukraine conflict, and even if feed and farm input prices crashed, the proverbial tap cannot be instantly turned back on, so this cycle seems unbreakable this side of next year's South American soya harvest. Forecasts for the UK reduction in milk supply range from a ridiculously hopeful -0.8% to a whopping -8.3%, and we've just seen another hot week in soya, with both beans and oil hitting the highs again, up 5-7% on the week. Early frosts in Argentina are pruning the soya crop forecasts, and despite an expected 4% swing from corn into soya planting in the US and Canada, even the November 2022 contract is still at decade-high levels.

So, the painful realignment of food with energy, housing and consumer goods continues, probably for another year at least, as the battle between inflation and interest rates plays out.

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

14 April 2022: Easter truce?

Whilst the world hopes and prays for a real and lasting truce in Ukraine, it seems that in our part of the commodity community, traders have left the field unchanged over the past week. What makes me feel this is just half-time rather than the top of the mountain, is looking at the backdrop of veg oils, grains and energy, world indices are raging again.

Skim milk remains unchanged over the past week, the first time since a lull in the upward vortex in March, and sweet whey only rose a modest €10. Interestingly, forward contracts as far ahead as June are now freely offered, unheard of in the mad scramble higher in Q1. And that usually presages what should be a monumental slide. But, outside markets have other ideas. A fourfold reduction in grain exports from Ukraine in March versus February has hiked world wheat markets up over 7% this week, and the soy complex has favoured soy oil over soya meal and that market has taken back all the recent losses. Brent Crude has bounced 10% in the last two sessions, but the long term winner remains palm oil, going from its former pariah status to the natural replacement for the possible 85% shortfall of Ukrainian and Russian sunflower and rapeseed oils. And the Indonesian and Malaysian governments (whose countries account for 85% of world palm oil production) have signed a cosy non-completion agreement aimed at riding the tiger’s back for as long as possible.

So while the milk powder traders have knocked off for Easter, the markets they will return to manipulate don’t look as soft as consumers need them to be. The only bright spot is Sterling, which is the least badly performing currency in the European axis, currently trading at €1.215, which hasn’t been seen since sometime in 2015. This spurt has been brought on by forecasts of steeper interest rate pressures than the eurozone.

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

Announcing the SuperCow® range from BDC agri

SuperCow® is a new range of complementary feed products for the dairy industry, available in the UK exclusively from BDC agri:

• KETONITE® – Powder and liquid product helping prevent ketosis

• CLOST-RID® – Esterified fatty acids helping reduce diarrhoea in calves

• PHIX-UP® – Fast acting and persistent buffering, helping reduce heat stress and lameness

Find out more on our website or visit our stand B153 at Dairy-Tech 2022. Experts on KETONITE® from PHYSAN and CMRs from Lacto Production will be with Greg on the stand.