4 January 2024: A strange balance

Happy New Year!

Markets remain unchanged, whilst traders still seem to be enjoying the beach in Goa. I doubt it will last long, as supplies are still next to non-existent, but demand remains muted after a very brisk Q4. Producers want a higher market, traders don’t care as long as there’s arbitrage and buyers expect waning demand to force the market lower. On balance, I’ll go out on a bough and predict this year won’t see the new year slump and we’ll be off to the races again, with higher prices, certainly for milk powder blends.

In other markets, crude oil has put on a good 10% since trouble in the Gulf erupted, and a cursory look at marinetraffic.com shows an enormous increase of shipping rounding the Cape, with the attendant increase in price of $400-500 per container. However, for once, the biodiesel influence has retreated, as the whole soya complex is down, with meal solidly below $400 and oil back down into the 40 cent department, on the back of every South American soya producing country posting enormous increases in their 2024 crop forecast, outweighing a predicted record increase in bean demand from China.

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

21 December 2023: What is going on?

Not exactly a nightmare for procurement of milk powders, but a headache disguised as a conundrum.

There’s some crazy expensive stuff going on in the real world of sourcing physical supplies of several components of milk blends, whilst the market prices being advertised are unchanged to lower. Sweet whey is posted down 1% to €810, whilst skim milk is unchanged at €2530 for feed, still an unprecedented €10 lower than edible grade.

But here’s what is really going on. Starting with Dutch skim, the October stats have just been released, and the stark reduction in processing has continued, down to 3,700 tonnes per month, now half three year average, so this definitely supports prices going forward 

Sweet whey supply is being severely limited, starkly different from even two weeks ago. This may be traders shutting up their market barrows early before the holidays, and it’s producers at it too, but it certainly doesn’t presage the usual new year slide. 

Whey permeate has disappeared from the market, when it was being thrown at it a month ago

Fat-filled whey is now €200 above usual trends, with the five producers comfortable in their price solidarity

The tin lid on the market is wheat gluten. I know not the circumstances, or the reasons for them, but one producer had their factory burn and the second announced a five week maintenance closure. Two weeks ago, the market was at €1650, the fire took it up to €1850 instantly, and yesterday one available load was being hawked at €3600! One can’t make stuff when suppliers wave ‘force majeure’ clauses, so this is seriously impacting spot prices, and it seems unlikely we will return to the old pricing level once full production is restored. 

So it’s not a happy Christmas message I’m afraid, but when the books do finally close and you knock off for the holidays, however short, I wish you a Happy Christmas and us all a prosperous but, above all, a healthy New Year.

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

15 December 2023: PushMePullYou

The equal and opposing forces in milk powders are at it again. Sweet whey posted unchanged this week, and skim milk down €20, something less than 1%.

Taking whey first, the only EU state where supply exceeds demand is Italy, where the market is weaker, but not by enough to depress the Dutch headline market. Everywhere else, traders claim supply shortage, but the reality is that supply is meeting more muted demand. Maybe it’s just a Christmas thing, but neither a hike or a collapse look probable this side of the next month. Whey permeate is also rising in price, adding to the support side of the argument.

Skim milk is effectively in the same supply/demand boat, but with the more tangible proof that supply isn’t easing, as the premium for edible over feed grade is now wafer thin at a remarkable €10, when it is more usually three digits higher. Given the visible elements acting on both whey and skim, they could part company later in January, as whey stocks come out of the woodwork in a quiet new year market, whilst both grades of skim milk could head north on genuine supply shortage.

It’s still ‘jam tomorrow’ for actual rainfall in northern Brazil, and only the prospect of a truly mega crop when it does arrive is holding the Chicago soy complex broadly unchanged over the last week. 

You wouldn’t think that the BoE had left interest rates unchanged, looking at the £:€ this afternoon, but the dovish Fed comments has at least seen it sparkle against the dollar.

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