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12 January 2023: Overstocked



The modest losses in sweet whey and skim milk over the past week (both down €20) belie the significant oversupply of both products. An interesting exchange with a major bag manufacturer illustrates the macroeconomics of current milk powder supply and demand; retail size sack demand is down 15% globally whilst bulk bag demand has surged, indicating that processors are increasingly storing their byproduct in the demand vacuum. Whilst the situation hasn’t got quite as dire as the picture above, the prospect of both markets decreasing below the sharply increased cost of production looks distinctly possible.


Global oils and fats markets aren’t helping support milk powders, either, as while soya beans have just peaked at $15.25, the highest in six volatile months, and meal heads for $500 and the highest level on the March futures contract, soya oil and palm oil have remained largely rangebound for the last six months. Drought dogging the prospects for the Argentinian soya harvest, and unusually dry conditions in the US soya belt have coupled with commodity funds taking record long positions, confident of a significant upturn in post-Covid Chinese demand.

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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