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11 March 2020: Catching the falling knife

Sit tight, this one's a long one.

In summary, the market is in free fall on skim, and being followed by whey, and dangerously so. Pricing websites are struggling to confirm actual trades, buyers stand out and the whites of the eyes of the producers are starting to show.

True, the skim market should be in free-fall, given the way it was artificially hiked throughout 2019. But overlay the effect of coronavirus on pretty much every market other than gold, and we have the dangerous situation of large-scale milk processing capacity potentially being mothballed and prices being marked savagely higher before production is restarted.

These are, of course, unprecedented days, but old trading adages still hold true; 'be fearful when everyone is greedy, and be greedy when everyone is fearful' and 'the market can remain irrational longer than you can stay solvent' come to mind. Of course, the opposite 'danger in catching a falling knife' is equally true, and the buyer's angst is exacerbated by inactivity in an unjustified bull market and equally by buying the market down.

In brief, whey is down €20 in France and €30 in the Netherlands (-4%) and feed grade skim milk is down a whopping €80 (-3.4%).

Dominic Cummings' first budget, delivered by a twelve-year-old who has nearly four weeks' work experience, was all about 'getting it done'. But once the crackle of the soundbites fade, the market decides, and the pound is currently sinking to levels last seen in the darkest 'no deal Brexit' days of last summer.

True, slashing interest rates by two-thirds played a part in sterling's demise, but dressing up what is undeniably an emergency budget as a carefully costed bonanza for the northern man in the street is transparent.

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


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