14 April 2022: Easter truce?


Whilst the world hopes and prays for a real and lasting truce in Ukraine, it seems that in our part of the commodity community, traders have left the field unchanged over the past week. What makes me feel this is just half-time rather than the top of the mountain, is looking at the backdrop of veg oils, grains and energy, world indices are raging again.


Skim milk remains unchanged over the past week, the first time since a lull in the upward vortex in March, and sweet whey only rose a modest €10. Interestingly, forward contracts as far ahead as June are now freely offered, unheard of in the mad scramble higher in Q1. And that usually presages what should be a monumental slide. But, outside markets have other ideas. A fourfold reduction in grain exports from Ukraine in March versus February has hiked world wheat markets up over 7% this week, and the soy complex has favoured soy oil over soya meal and that market has taken back all the recent losses. Brent Crude has bounced 10% in the last two sessions, but the long term winner remains palm oil, going from its former pariah status to the natural replacement for the possible 85% shortfall of Ukrainian and Russian sunflower and rapeseed oils. And the Indonesian and Malaysian governments (whose countries account for 85% of world palm oil production) have signed a cosy non-completion agreement aimed at riding the tiger’s back for as long as possible.


So while the milk powder traders have knocked off for Easter, the markets they will return to manipulate don’t look as soft as consumers need them to be. The only bright spot is Sterling, which is the least badly performing currency in the European axis, currently trading at €1.215, which hasn’t been seen since sometime in 2015. This spurt has been brought on by forecasts of steeper interest rate pressures than the eurozone.


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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