4 March 2020: Whey pulls the ripcord

The market has pulled the ripcord on the parachute and descent has slowed somewhat, at least on whey. Skim is down a whopping €90 on the week (-3.7%) but whey has only shed €10 (-1.3%), so we could see the bottom of the whey graph ere long. Skim is arguably the softest of the two markets, as its fifteen month climb was artificially engineered. Quite how the virus pandemic will drive milk powders is hard to call, as the backdrop to falling consumer demand is unlikely to follow through in animal feed demand in the short to medium term, and a reduced workforce is arguably a bullish factor. However, the fall in the markets has coincided with the global spread of Covid-19, and the virus is still being cited as the main reason for the slide in milk powders.

Currency is interesting at the moment, with the precipitous drop in the Pound being blamed on the mere possibility of easing UK interest rates, whilst the US$ rode out their actual interest rate cut with barely a wobble. When the global economy is reckoned to drop by 1.5%, it makes no sense for the Pound to take the beating it has suffered last week and this. Its next direction is likely to be influenced by the opening round of trade talks with the EU, so the next move will probably be further down; classic ’sell on rumour, buy on fact’.

Our current global woes of pestilence, bush fires and tempest is a bit like watching the Old Testament on catch-up …

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

27 February 2020: Parachutes, anyone?

Market now in free fall, without a buyer in sight. Skim is down by an unusually large increment in a falling market, down €60 on feed and food grade, and whey by €30, whey falling nearly 4% to skim's 2.5%. The cause is the same as last week's official reason: the virus pandemic. But this old cynic believes it is buyer's revenge on the unbridled greed of the ex-intervention stock holders during the whole of 2019, and the middle market's delight in having short-sold the market. So, we are condemned to hand to mouth buying for the next period, until we see how things bottom out, and then, no doubt, the inexplicable bounce ...

Sterling has been unhinged by today's refusal of the third runway at Heathrow. It's odd how a leopard changes its spots. The former MP for Uxbridge famously threatened to lay down in front of the bulldozers to stop it, then suffered terrible amnesia and agreed the third runway was a thoroughly good idea, once he was Prime Minister ...

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 February 2020: Whey and skim on the slide

Things are starting to slide, as profit-taking has brought the market down significantly on SMP and more modestly on whey. It is interesting that although we have seen €60 out of skim in the last week, and only €20 out of whey, because of the relative price difference between the two, whey has fallen more in percentage terms. Skim has now fallen €80 since the end of January and whey by €50, but this represents an even greater percentage gap, with whey falling over 7%, compared to skim’s 3%.

The principal reason given is coronavirus, but this seems facile given no interruption to European economic activity. A much more likely scenario is that it's payback time for the savage rises in skim prices after the intervention sting of autumn 2018.

Sterling is quite frankly amazing, holding above €1.20 and $1.30, given the chaos caused by the nerdy 12-year-old misfits that Cummings employed to take over the running of the Treasury, but I’m told it was the higher inflation figure that excited currency traders, with the attendant pressure to raise interest rates.

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