
Excuse the guitarist’s metaphor, but that’s the buyer’s dilemma in this most confusing of markets.
All pointers were downwards, until this week’s prices were released, to show over 1% increases in both sweet whey and skim, up €10 and €30 respectively. Whey we can write off as a correction, but skim milk needs further analysis. Looking at both arguments, here are the arguments proffered :
Bullish:
Traders are buying and storing (this is very recent news), when usually spending time in tax havens this time of year
Tenders for auction in Sweden notably higher, buyers from France and Germany outbid
Dutch traders exporting sweet whey to Central America
Bearish
Liquid milk glut in China, authorities installing fresh milk tanks in feeding lots to reduce imports of CMR
Liquid milk price drops to $0.15 per litre for fresh milk in China
Whey markets in Italy and Spain remain €20 under Netherlands, usually premium
All CMR raw materials freely offered, wheat gluten shortage has now finished
Middle East tensions rising again have seen crude oil tick upwards, but veg oils have eased over the week. Palm oil still remains stubbornly about 5% higher than the May lows, but soy oil is now at 42 cents per pound, two thirds of the price when the contract went on the Board a year ago.
Taking the above into account, whilst it’s worrying that the trade is apparently buying and storing, I can’t see too much to support a rally, so expect to be recanting this hypothesis within a fortnight
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
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