4 March 2022

Markets continue to firm this week, but not with the savagery that we have seen of late, as sweet whey is only up €10 and skim milk €20 on the week. Physical supply has got noticeably easier, with the exception of hydrolysed wheat gluten, as four major suppliers have called force majeure and literally nothing is available for at least a fortnight. On the other hand, whey permeate is freely available, and even acid whey has reappeared. Background markets are remarkably strong for soya and palm oil, but proteins have survived a tumultuous week virtually unchanged, although it’s all been about wheat and oilseeds.

Looking back at the historical price graph for skim milk powder, it is significant that the market collapse in 2014 was caused by trade sanctions on Russia in the wake of the annexation of Crimea. Whilst the current disaster is overlaid on top of worldwide commodity inflation, today’s milk powder market does differ from the fundamentals in 2014, as there were still burdensome intervention stocks weighing on the European market then, and today we have near to zero stock.

Predicting how various sanctions will manipulate world market is beyond my ken, but looking solely at the known factors influencing milk powders, prices do look overcooked.

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

24 February 2022

I’ll keep strictly on topic this dark day, other than to mention all overnight futures markets are limit up, as is the safe haven dollar.

Both sweet whey and skim milk powder put on €20 over the week, so are back in step. The interesting factor is that the market is entirely controlled by traders rather than manufacturers at the moment, with freely available product that was purchased from producers up to 6 months ago, with commensurately large margins. When a market gets to this stage, it usually signals a sell-off as soon as the first trader jumps on the down escalator.

Fat filled whey and what gluten remain the only products that are physically short, and still critically so, with part loads being delivered against full load contracts, when available.

Maybe history can teach us something here. In the 2014 annexation of Crimea, the milk powder markets dropped 45% in a month. In 2019, a million yellow-jackets took to the streets in France, protesting about fuel at €1.50/litre, whilst today it has topped nearly €1.70 with no reaction, yet. Whilst the market momentum is currently politically driven rather than supply/demand fundamentals, trying to call the next direction is pointless, but if the political situation stabilises, it seems a fair call to predict the milk powder markets easing in Q2.

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

17 February 2022: Parting of the wheys?

I was talking to a fertiliser trader recently, and it seems there are warehouses full of expensive fertiliser, owned by nervous traders, and farmer buyers are waiting to see who blinks first. And I sense perhaps the same thing is happening with sweet whey, as we see unchanged levels in shop window prices, but discounts are finally being offered to move stock, a classic sign of an overblown market.

However, it’s a different story concerning skim milk powder, as we saw another whopping €80 go on the price this past week, possibly fuelled by the annual milk powder tendering by Algeria and Morocco. So the current trajectories of whey and skim seem to have diverted, for the time being, at least.

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