14 May 2020: Here we go again ...

Suddenly export demand from the Far East is dominating the headlines, presumably because East Asia has emerged from lockdown before Europe, and consumer demand is rising. Japan, Korea, Thailand, Taiwan and now the biggie, China, have all weighed in with import orders, mostly SMP, whey powder and whey protein concentrate 35%, and paying what it takes to get tonnage on the books. This has impacted on a market already short of derivatives such as whey permeate and lactose, the prices of which now exceed whey powder, which is an unusual state of affairs.

Despite that, whey has ticked up only a modest €10 this week, but this surely can't be the end of the rise. Whey's price aspirations have been helped by skim milk powder, which has leapt €50 for feed grade and €80 for edible grade in the last week, albeit from physically unobtainable prices €200 below the real market. This has pushed the real world of skim milk to over €2000 this week, and it's still difficult to find physical sellers, so happy are the dryers to ride the wave, and the middle market traders enjoying a get-out-of-jail-free card. And by the feel of it, despite dire liquid milk prices across Europe, the dryers are quite happy for the margin from skim to keep them afloat, and this unwelcome surge isn't over yet.

Sterling has drifted lower against the euro and dollar, sentiment not helped by our hapless chancellor voting against the government and supporting a Tory rebellion that was trying to stop chlorine-washed chicken and hormone-fed beef being sneaked into the UK:US trade deal that Cummings is cooking up. Apparently he pressed the wrong button, or that's what he told the whip's office!

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

7 May 2020: Gently drifting higher ...

Not much change to report, other than a gentle drift higher.

Whey is still in short supply, as the big switch-on in food processing hasn't happened yet, and this has added perhaps the surprisingly modest increase of €10 to the Dutch and French markets. This could easily fall when full cheese production is in full swing, but the decline is likely to be slow when it comes, and one can't rule out further increases in the near position.

Skim is equally hard to find under €2000, despite the Dutch market price quoted for feed grade being €1800 (but interestingly an increase of €20 over last week's, so there is recognition that demand is exceeding supply). However, the inevitability of milk prices dropping further across Europe must surely weigh on skim prices later in the summer, but for now the stand-off between processors standing firm and consumers having to pay up continues.

Sterling has surprised the markets by putting on a cent in the past couple of days, despite the backdrop of the gloomy BoE forecast of the deepest depression since the South Sea Bubble, exactly 300 years ago. But given every economy in the G20 and beyond is in an unprecedented muddle, currency swings are hopefully going to be modest until much deeper analysis of the new world financial order is made.

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

29 April 2020: Equal and opposing forces

For strange reasons of little or no activity in milk powders, and equal and opposing forces of optimism and pessimism, the market is unchanged this week.

Taking whey powder first, the shortage in physical supply still exists, but with lockdowns across Europe showing signs of gradual easing, cheese production for the restaurant and catering trades should resume soon (one example I heard this week was a mozzarella producer freezing their product in anticipation of pizzerias reopening ere long).

Skim milk powder is still in two worlds, the paper and physical markets. In a seismic shift in EU thinking, it seems the intervention system is being circumvented by Brussels paying producers to put un-marketed skim into private storage rather than dump it on the taxpayer, and whilst I'm not aware how this will work, the rumour has supported prices. The paper market still has skim at €1770, but in the real world of middle market traders with burnt fingers, there is little appetite to sell below €1900 to consumers who need spot material. It's not that the processors are paying top dollar for liquid milk, there are tales of swingeing price cuts all over Europe, and certainly French farmers will no doubt be striking in reaction to the relatively small price cut of 5 cents/litre allegedly imposed by Lactalis this week.

Taking all the above into account, appallingly low dairy farm incomes for some time, plus a return to normal supply on whey, prices for milk powders look set to be rangebound for the remains of Q2.

Now the Boris Bounce includes his baby, we see sterling luxuriating in a half cent recovery. However, if he takes paternity leave and relies on his lightweight acolytes to keep trying to run the country, I can't see that optimism lasting.

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