There are definitely two camps at the moment, the producers/traders and the consumers. Here's what the producers reckon:

1. China ending lockdown in June will explode import demand for sweet whey and skim milk

2. Europe has been drier than the Nullabor Plain for months, milk production is very low

3. Demand remains high (?)

4. The largest producer in France is selling lots to the middle market

I won't bother to list the buyers' repudiation of each of the above points.

The plain facts are that both whey and skim dumped 3% of value in the last week, which is unusual in that for the second week running it is effectively in free fall, when markets usually rise fast and decline more slowly. What is worrying is that the rest of the related commodity basket had a quiet week, palm oil has dropped back to 60KMYR on the basis of 'burdensome stock inventory'. This is based on April figures before the Indonesian export ban was enacted, so we will probably see significantly larger exports in May, so the market will probably bounce by month-end.

So, if we think the milk powder market was plain overdone, this is a rapid correction, but as global grains have been raging, this bullish cycle hasn't burnt out yet and the moment volume demand kicks into the milk powder markets, we'll be off to the races upwards again.

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