23 September 2021: Peak Cheese and No Milk

What a pretty pass! Here we are in peak Christmas cheese production (lots of sweet whey, no problem) but with critically low milk supply going into what should be peak milk production.

Sweet whey stabilised over the last week at €990 and is likely to remain plateaued and not reach the price peak of €1025 achieved in May this year. It’s an interesting historical graph, as whey just breached the €1000 mark several times between 2011 and 2014, and has tested the lows of €500 just once since, in 2016 (the record high was €1300 in Peak Oil in 2007, followed by the record low of €360 in the depression that followed in 2009). However, I’ve never been a chartist and trust tealeaves more than Fibonacci, so these strange days may yet deliver a surprise upswing in whey.

The problem is skim milk. The headline Dutch market price only posted a €40 increase this week, at €2620, but prices over €2800 have been paid in France to secure very limited quantities. The last time the market saw this kind of squeeze was the intervention sting that started in autumn 2018, when two traders forced the market up and doubled their money, from €1300 to €2500. That was withholding stock from a market that was broadly in supply/demand balance, which the processors were delighted to follow up. This time, the cupboard is bare, and I don’t wish to be a doom monger, but this market could test the 2014 record of €3200 before impoverished dairy farmers are forced to feed raw milk. I understand Arla hiked their milk price 0.3p/l yesterday, but it’s a slow tap to turn on farm, so brace yourselves for further increases in skim milk prices….

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

20 September 2021: Skim short, plenty of whey

Apologies for late transmission, the SPACE show took up nearly all of last week.

The market followed the same trajectory last week, with the same fundamentals; namely, both skim and sweet whey rose, skim because it’s in increasingly short supply, but whey is caught up in the vortex with strangely more sellers than buyers. Sweet whey posts €40 this week, and whey up €20.

As far as skim is concerned, this is worrying, as we come into peak milk production there is usually a lot of stock on warehouse floors, but low milk production through the summer combined with the disappearance of intervention stocks from the market will probably push this market a good deal further.

Sweet whey, on the other hand, is freely offered from all directions, so the rise is suspicious and I don’t see it as a buy signal. The backdrop of the proteins market looks stable, with the soy complex having another quiet week, so soon some of this oversupply will need moving and at worst the market should stabilise.

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 September 2021: Markets on the march (again)

Both sweet whey and skim milk are on the up, the former ratcheted by the middle market, but the latter because of fundamentals.

Sweet whey has posted €20 higher this week, which is now €60 higher than the low at the beginning of August. This smacks of trader manipulation, as there is plentiful physical supply, and US whey and lactose has dominated the Chinese and S E Asian markets lately, so not a bullish signal for the European market.

Skim milk is a different story, though, as the €30 it has put on over the last week makes it €160 dearer than the end of July. This is perhaps the traditional return from vacation panic to stock for autumn calving, but stocks are low and only bits and pieces are available.

If I were a betting man, I would be poorer than I am, but my Q4 view would be to buy the skim and sell the whey.

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