8 January 2020: Milk powder markets both unchanged

Now the Christmas and New Year holidays are out of the way, the milk powder markets are both unchanged.

Skim milk is freely offered at unchanged levels, but by the middle market rather than the intervention long stock holders, but it is difficult to believe the whole 170,00 tonnes has been squirrelled away. However, there were big sales to Ageria and Cuba in Q4 2019, and also big orders from Africa, which took large quantities of the oldest ex-intervention stock that wouldn't sell in Europe. Plus skim production in Australia was massively reduced because of the drought there. However, as the African market is already bought, a lack of Q1 demand could see prices fall. It feels potentially weak, but the margin these traders are sitting on is probably limited, so a wholesale slide seems unlikely.

Whey is in balance, producers aren't overdone with stock, and are releasing it slowly, but demand isn't sparkling either, so the whey market is likely to drift sideways until new factors emerge.

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

18 December 2019: The market is dull and unchanged

After being the bearer of bad news for so long, it is a blessed relief to be able to say the market is dull and unchanged. It may have just shut up shop for the Christmas holidays, but sellers of both skim and whey claim they'll be hiking prices after new year.

Looking at skim milk powder, although unchanged in France and Netherlands, it actually fell €20-30 in Germany during the last week. One of the reasons for some longed-for softness in the skim market is that the protein fraction is very expensive, and traditional SMP protein users have switched to using more whey protein concentrate and straight whey. This in turn is putting upward pressure on whey, especially as a significant number of dryers have turned their towers over to the much higher returns from skim, and liquid whey demand from pig farms has reduced the supply line.

So we could see a slightly softer skim market confounded by a rise in whey come the new year.

The currency markets have come back to their senses, call it the hangover from the overindulgence of the election after-party (although it is interesting to note that the highs seen were immediately after the exit polls were released at 10pm last Thursday), but the usual jitters have returned with the threat of Borisconi taking the UK out the hard way at the end of 2020.

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

11 December 2019: Skim: Topping out or correction?

Skim milk powder has now officially plateaued, albeit for a single week. Whether the market has reached the sunlit uplands imagined by the two big intervention stock buyers over a year ago is difficult to call. There are two schools of thought as to where the market will go. If the middle market traders have sold their positions, as is suspected, we would see prices fall in a normal market. However, this is no normal market, as it is cornered by the intervention stock-holders, who could force it yet higher.

It would be a very dangerous strategy to short-sell skim with these conditions, but there is an equally compelling argument that milk processors could discount the market, forcing the licensed bandits to follow suit, but this phenomenon would likely be a much slower decline. About as easy to call as the general election.

Whey is unchanged in France, but posting another €10 increase in Holland. Supplies remain ample, so little chance of a sustained rise, especially with the bull run on skim running out of steam.

The Pound continues to reflect the Tory poll lead, which affirms the markets' understanding that 'Getting Brexit Done' equals remaining in the Customs Union in the reheated May deal, apart from throwing Arlene and the boys under the bus.

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