Milk powder markets have really decoupled from the protein/oil complex in the last fortnight, with both skim milk and sweet whey shedding 2%. Individually, the difference is stark, as whey only lost €20 but skim a whopping €70, but their relative values explain this. Sweet whey is now only €100 or so off breakeven at €920, but skim milk producers are paying the price for way overblowing values in Q1, as the €70 drop hides the desperation of producers, and similarly our friends the middle market traders, who are running out of space to store the powder mountain they withheld last winter.

Regarding background markets, soybeans and soya meal have bounced, 50 cents and €20 respectively, buoyed by potential Chinese demand and still disastrously low water levels in the Mississippi, hampering barging downriver. Soya oil has remained muted, but palm oil has jumped surprisingly, helped by a weak Ringitt offsetting more than ample stocks. But milk powders are following their own downward trajectory, and not seemingly connected to the soft commodity complex.

I shudder to comment on currency, as things are moving so fast, anything one writes is history pretty much immediately. Sterling has bounced majestically overnight, as the expectation seems to be that the Chancellor will be thrown under the bus, but is counterintuitive, as political instability usually trashes sterling strength.

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