1 August 2019: Skim milk is in too few hands and whey is the opposite

Having been on a road trip with Sylvain these past two days, we have talked much on the likely future of the milk powder market, discussing scenarios and constructs, but neither of us subscribes to any particular one. The dichotomy is that skim milk is in too few hands and whey is the opposite, which partially explains the huge gulf between their respective values at the moment.

The illiquidity in the skim market is illustrated by the paper market reporting €30 and €40 increases in Germany this week, presumably for tiny traded volumes, whilst if you twist a supplier's arm, unchanged values are still possible, but there is no evidence whatsoever of any trader breaking the price. Whey, on the other hand, is at the mercy of traders wanting arbitrage in the market, and short selling to whoever will buy, whilst posting lower bids to producers. It hasn't worked yet, but local differences are appearing, in that the Netherlands posted a €10 drop in whey, but Germany posted a €30 increase.

So picking the bones out of that, I'd say we could see more out of whey, unless of course the short-sold traders get their fingers burnt and the German rally continues.

However, a few bob out of commodity prices is dwarfed by the slide in sterling. I don't know what the money markets were smoking last week when Boris went to the palace, but the honeymoon was over by the end of the week and the marriage is on the rocks already, with exchange to match. Stories of plucky Brexit Brits getting 88 euro cents for their beloved pound on the Costa Del Wherever abounded, but what has surprised me, driving round these past four days, is how may European number plates are on UK roads, as Blighty is now a cheaper holiday destination than Croatia.

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

25 July 2019: Currency is a funny old market

Starting with skim milk this week, it’s an interesting market of equally opposing forces cancelling each other out. Sellers are adamant skim must rise, probably the traders who bought into the end of the big hike in prices, desperate to see a margin. Buyers are understandably standing out of the market, waiting for gravity to act on it, and buying very close hand-to-mouth material.

After Borisconi’s intervention in the whey market last week (another untruth in his leadership campaign, to go with Kippergate, this time bellowing we will have enough whey for our no-deal Brexit Mars bars, characteristically ignorant of our national balance sheet as net importers), the market continues to fall, but there are definite signs the brakes are starting to bite. Obviously, this slide has put buyers off, expecting the downward pressure to remain, but it wouldn’t surprise me to see to see prices make an upward turn, even if it is just a correction.

Currency is a funny old market. The pound slides nearly seven cents against the euro on the prospect of a Johnson victory, then promptly recovers a couple of cents when it happens, despite a fairly clueless cabinet selection. However, now Trump’s monkey is installed, the pound:dollar rate is pretty much unchanged, suggesting the money markets consider the ‘deal' will be great for America.

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 July 2019: Whey's where all the action is

We'll lead with whey this week, as that's where all the action is. Cheese production is still going gangbusters, so plenty of whey, and whilst we know the extent of the downturn in Chinese demand, I learn that European veal production has slumped, with farmers seeking to raise the previously oversupplied market. Could be September that we see veal demand for whey kick in again, and a hike in whey prices (beloved of the traders, to whom a flat market is no market). But until then, it's open season, with whey down €20 in Netherlands and €10 in France, so further falls are probable in the short term, but as we all know to our collective expense, markets go up faster than they come down.

Skim, on the other hand, is at the other end of the seesaw, posting increases of up to €30 in edible and feed markets in Europe. However, it is freely available, and available under the radar at pretty much unchanged values, so Lacto do not see this as a genuine climbing market, in the short term, at least.

Currency plumbs new depths, matching the utterances of presidents and wannabe prime ministers, and as we waddle ever closer to the Halloween cliff edge, at least Brexiteering holidaymakers will start adjusting to our banana republic currency when they're getting parity with the pound:euro.

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