11 June 2020: Equal and opposing forces

The enormous forces acting on milk powders are equal and opposing, and thus it is unchanged from last week. Not often I get to say that.

Skim milk is doing very strange things, in that is quoted unchanged in the Netherlands, at €2030, but some chancers in France are asking a cool €300 extra, so I expect Dutch truckers will be barreling down the road to Rennes. It's worth mentioning that edible grade has edged €30 higher, and the premium is now nearly €200 over feed grade. However, the take-home message is that it is now freely offered, so it is a reasonable hypothesis that it has peaked in the current cycle.

The reverse might be true of whey powder, as although it has posted unchanged levels for a month now, is not freely offered. There's still a feeding frenzy in SE Asia, and Lacto have taken orders for 300 tonnes to Korea, China and Thailand in the last two days. Apparently, the root cause of the whey derivative shortage was the legislative change in China, in February, to allow whey permeate for edible use, and they've priced it out of animal feed inclusion. Given the balance of price pressures, I'd say the next move is likely to be higher, probably before Q3 starts and the autumn milk replacer demand kicks in.

Sterling remains rangebound in an unusually tight corridor between €1.12 and €1.1250, but has returned to late 2019 levels against the politically embattled dollar.


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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