18 March 2021: “Tops and bottoms of markets are made for fools”

(graph www.clal.it)

It’s official, sweet whey is now dearer than at any time since Peak Oil in 2007. And, more significantly is still rising faster than the four peaks, all seen in January from 2011, 2012, 2013 and 2014. Maybe it is significant this time round to note the precipitous falls immediately following those peaks, which is producer heaven and trader hell, as buyers head for the hills.

The bald facts are that sweet whey has risen 10% during March, up to €1020, now fully €200 higher so far this year. Supplies are available to those who pay up in desperation, so there is definitely not a squeeze on supply, thus confirming this is a ransom market, as with the soya market broadly plateaued and European pig prices so dire, it looks like the pips are going to squeak on whey very soon.

(graph www.clal.it)

Skim milk, on the other hand, is tracking the latter stages of the 'intervention sting' that was engineered between autumn 2018 and January 2020 (followed by another precipitous Q1 fall), and looks like achieving twin peaks, as the feed market is up €250 in 2021, to current levels of €2420. Another interesting feature affecting skim milk is that the price discount for feed grade under edible grade has shrunk from €100 to €50, suggesting feed demand is driving the market, a signal that is usually indicative that the market is overdone (although Covid has reduced demand for skim from the edible sector).

Downgrade products (edible whey and skim that have not reached specification on colour or nutrient content) and derivatives (permeate etc) are also being withheld, so classic signs of producers milking the market yet higher.

In summary, both markets look well overcooked, but as producers are still withholding freely available product, and particularly whey is pricing itself out of feed formulations, the market looks without foundation.

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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