10 March 2022: The upward vortex continues



The upward vortex continues. At this very moment, Brent Crude has retraced yesterday’s losses that were borne of UAE upping oil production, along with rumours that our new enemy’s friend Iran might become a lesser old enemy if the west lifts the crude oil embargo.


Looking specifically at milk powders, sweet whey posted unchanged levels this week, but skim milk is off the scale again, up €70 and heading inexorably for €4000. The backdrop to that is a wild week in veg oil, with soya oil trading over a huge 5 cent range yesterday, albeit closing down mid range. Hydrolysed wheat gluten is completely unavailable, and lactose and demineralised whey supplies are ample, but at a price. Whey-based CMRs are having to be substituted with soya and other protein concentrates to make spec.


Focusing on the longer term pressures on milk powders, it all seems to come down to crude oil, and the mad western scramble to get around the Russian problem. Despite the prospect of more serious global food poverty, politicians are seriously looking at mandating an increase in biofuel inclusion, and the vegoil of choice is palm, which has now trebled in price in two years. This has ratcheted up soya oil, which will bear the brunt of what almost definitely now will be a huge decrease in sunflower oil from Ukraine. With demand for soya oil for edible use and soya meal for animal feed, in my opinion, the whole soya complex is underpinned for at least the next year. Dairy proteins will likely remain linked to the fortunes of veg proteins, and milk powders will probably be fundamentally revalued at levels above the current evolving market.


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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