Skim milk is in the hands of strong sellers, and they ain’t budging. In fact, edible SMP actually rose in Germany last week, only €10, but a rise is a rise. Whey, on the other hand, continues its slide. After a slow start this year, cheese production is going gangbusters, throwing up a glut in whey supply, not troubled by whey consumption dropping in China by 20% in the last quarter. It seems that the sum of cheese plus whey gives greater returns than drying milk for skim, so that explains the current dairy balance sheet.

Whether skim could be persuaded downwards depends on how real the Chinese beef demand story is. It is still comfortably inside the mid price for the last six years, after the peak in 2013 and last year’s bottom. If the European calf milk replacer market is large enough to weigh on the global balance sheet, I don’t know, but if we see dairy farmers move towards more whey-based powders and abandoning skim, that could bring the SMP price down, but it is likely to be deep into the autumn before that would take effect. Plus, the dynamics of the edible SMP market will probably have more effect.

Currency still languishes, as business views the bus-obsessed favourite to win the leadership with little confidence, whether he’s making models of them, writing porkies on them or throwing ambassadors under them ……..

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