3 November 2023: What's going on?

I feel a bit like Robin from ‘Ghosts’, trying to work out where things are going at the moment. After the arch-manipulation by the Dutch whey market, it has suddenly halted and looked behind to see if any other markets are following. They are, Germany up €40, France up €45, but still below the Netherlands’ €840.

Skim is still ploughing on up, though, another 1% to just shy of €2600. Looking at the liquid milk market, the summer of discontent with producers facing the imbalance of high input costs versus low farm gate milk price has resulted in a fall of 3% in UK production. This may well force prices justifiably higher, which will not help in turn in pulling down milk powder values.

Looking at the wider market, news from SE Asia suggests milk powders are now too expensive against local pork markets, so usage will likely decrease, and this is a major global influencer.

Things are quiet in background markets, the US soy harvest is all but over, and rain is in the forecast in Brazil, and the soy complex sees beans about even, while meal stays high and oil dips. Palm oil is having one of its rare bouts of superiority, propelled higher by strong exports and Indonesian export controls to manage domestic food inflation, but as crude oil is now down to $80/barrel, there is little to support this rally.

The US and UK decisions to leave interest rates be has dampened the pound, still languishing in the mid €1.14s, so no help there.

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

26 October 2023: Conspiracy theory, anyone?

We all know the moon is made of cheese, but where did all the sweet whey go? Cheese production is going full chat at the moment, lots of lovely cheap liquid milk to go at, and top dollar for the whey! What could possibly go wrong? Stockpiling, that’s what.

The numbers are thus: Sweet whey up just shy of 8% in one week, up to €850 (for reference, mid August saw €520!), skim milk up €80, a more modest 3.2%. But these are Dutch prices, where traders have whipped each other into a frenzy worthy of a trade bourse, if anyone remembers those days. Not so the rest of the world, domestic UK prices are a full €100 lower, and in Germany minus €150! France is not quite such a discount, as they are net importers.

Traders claim that the whey coming out of cheese is liquid and goes to whey protein concentrate manufacture, but that’s a load of rowlocks as the last stockpile in WPC isn’t finished yet, and is still discounted by €600 under skim milk (usually at parity). So someone’s telling porkies and spoofing the market. Quite when this ends, as it must, is the question. Traditionally, we could see the rally start to collapse in January, but at this rate of bogus inflation, it could well be sooner.

Skim milk rising is slightly more justifiable, as production is genuinely down, but having said that, the stocks that built during the last price sting haven’t entirely been exhausted. Plus the fact that dairy farm incomes are now well into negative territory would indicate a slump in demand for milk replacers, but that is too blunt a tool to affect the market inside a quarter.

The soya complex parted company this week, meal up strongly, plus $30, but soya oil drifted lower, unlike palm which headed mildly north, but weak sterling put the tin lid on price rises.

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

19 October 2023: Parallel universe?

Excuse the Milky Way analogy, but yet again, our esteemed trading community is putting on a stellar performance, pushing markets further into altitude sickness.

Sweet whey rose another staggering 5%, by €40, and skim by only 1%, up €30. The most interesting fact is that feed grade skim is just about the same price as edible grade, and traditionally, when that happens, it usually means the feed market is well over-inflated. Also, off-grades are more plentiful, which is more usual in a falling market. Plus, the French skim market is now significantly lower than the headline Dutch market (which has been inflated by bullish traders) and local supply is plentiful, so it looks like the rally is running out of steam.

Added to that, supermarket milk prices are finally decreasing, so there’s little chance of farm gate values rising for liquid milk, and sub 30p levels look to continue. On the other side of the argument, a sharp fall in US soya oil stocks has underpinned a hike in the soy complex, and taken its pal palm oil with it, to levels not seen in over a month. However, a sharp drop in palm oil imports to India has been ignored, and also the prospect of next year’s Brazilian soy crop being 4% larger than this year’s record makes soya look well overcooked at these levels.

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