9 May 2019: 'It's confidential' Brussels

Not often do we see the two pillars of milk powder moving in different directions, but that's what's happened this week.

To quote Sylvain Fournier, skim milk is 'uncontrollable', up another €50 on last week (now €1880), and isn't far off three year highs now, and those peak prices date back to 2014 pretty much. However, the average price for the entirety of 2013 was €3k per tonne, so we just have to face it that a year ago, when SMP bottomed at €1300, it was too cheap.

There was a recent article in the French dairy press that contained this quote from the president of the European Milk Board:

'Brussels refuses to tell us who bought this milk powder. It's confidential.'

The 20/20 hindsight commentators (like me!) are saying that Brussels threw away €140m by setting the selling price too low. But whoever is sitting on a quarter of a million tonnes of the stuff can ride this market higher, then lower, and still be hundreds of quids in. They certainly have long pockets: it's over €300 millions' worth they've shelled out.

Regarding whey, time was when one commodity shot up whilst the other stayed unchanged, the old trading adage was to buy the latter, pronto, but that seems unpopular advice today with whey losing export demand from SE Asia. It's down €10 in France and €20 in the Netherlands, but I worry how far it can slide given the headlong rush by processors to dry milk and cash in on the traders' bonanza.

The pound remains broadly unchanged, as do the positions of everyone jostling for leverage in the Brexit debacle. Jeremy is under orders from his Kremlin handlers to deny the Labour rump demanding a people's vote, Teresa says she isn't the problem, Vince claims the council elections were a second referendum and Nigel, well, makes a lot of noise.

See also this article by Jane Byrne of Feed Navigator for a view of the likely impact of African Swine Fever on Chinese demand for whey powders.

---

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

3 May 2019

First of all, sorry for the late transmission, which is down to the rare combination of church and state holidays in Europe back-to-back; it’s not often Karl Marx rubs shoulders with the Vatican.

Skim milk continues its inexorable march north, up €40 on the week, whilst whey flatlined throughout the whole of April. With not a shred of market gossip to attach to this week’s rise in SMP, it’s worth taking the long view of the price relationship between the human consumption and animal feed market prices for skim. Over the last three years, the premium for food grade has been as great as €250 and as little as €100. The spread was at its maximum last October, when quarter of a million tonnes of feed grade intervention stock was flogged off. Since then, food grade has put on €400, but feed grade getting on for €550. At the turn of 2019, the gap was still €250, but has now narrowed to €130.

To try and tease out what might be happening going forward, food grade has plateaued during April, whilst feed grade continued to close the gap, so perhaps the bull run of the whole skim milk market is peaking?

Meanwhile, the whey market is still in irons (a lovely old nautical expression for when a sailing ship is static, head-to-wind, with no driving force either way), held in balance between the lack of profitability compared to drying milk and poor cheese production, versus the reduction in export demand due to swine flu in Asia.

The money markets seem to be backing the peasants’ revolt in UK politics, judging by sterling’s relative buoyancy this morning against the backdrop of the wholesale rejection of party politics in yesterday’s local elections. Now the PM has managed to get cabinet leaks onto the front burner, the press aren’t hounding her over lack of progress as we drift ever closer to the next Brexit cliff edge….

---

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 April 2019

Good morning, not much to say, other than skim milk continues its upward march, up another €30 over the week, making the rise a full €100 during April. This is no doubt the result of buyers not buying anything apart from spot requirements, and sellers quite happy to supply that demand, dribbling out small quantities at ever higher prices. It’s also worth remembering that SMP prices were just shy of €2k at the beginning of 2017, and we’re still €200k to leeward of that, so these levels are by no means unprecedented in recent terms.

The continued rise in skim could be a stronger influence on whey prices rising than the collapse in demand from Asia due to African swine fever, but ample supplies of cheaper whey permeate are keeping whey unchanged, this week, at least.

The pound has slid a cent or so on all fronts, with financial confidence slipping as the Tories, the former ‘business’ party, return to jockeying for leadership ambitions, enraged that their outgoing leader continues to engage with the opposition in putting the country’s interests before those of the party. Quote of the week must go to Nigel Farage - “It’s no more Mr Nice Guy!”

---

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