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18 January 2024: China Syndrome

Not the dreary 1979 film, where the gentlemen had bigger hair than the ladies, but more the lack of China in the current milk powder market model. It’s been almost two years that China has been pretty much absent from the milk powder market, as sluggish domestic demand from a near-stalled economy has lengthened the consumption of the expensive stockpile of whey powder. And without the Chinese dimension, the milk powder market can be said to be auto-regulated.


However, that cuts traders out of the game, and this week’s developments strongly hint at middle market meddling. We see 2.5% come out of sweet whey prices, and a whopping 4% out of skim milk. Fundamentals do not reflect this; processors say they refuse to process sweet whey at below €700 after getting their fingers burnt last year (their fault, withholding stock in 2022 when China was already out of the market), and skim towers are rightfully howling about the scarcity of liquid milk. 


So, muted demand balancing diminished supply was holding the market in balance, but somebody (and you know who you are, traders!) is breaking the vacuum by bidding the market down, to build a long book that can be cashed in when they turn the market sharply north. That’s my take, anyway. This manipulation is borne out by the dearth of downgrade skim offers in the market, when usually a bear market brings out the off-grades in droves. 


Looking at whey, permeate is still rising, and is at the usual €200 discount to where whey was last week, and whey protein concentrate is stable at €2150


So this week’s price reductions are modest and also indicative of the ‘real’ market.


Other markets are also-rans, soya is back down to last June’s lows, before the US crop suffered drought, and palm is having a love affair with itself, up to early December highs and ignoring cheaper mineral and vegoil markets. Other good news is that for once, Sterling is the least bad currency, with the uptick in inflation supporting interest rate stability.

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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