As the icebreaker of coronavirus smashes between the tectonic plates of the milk powder industry, the unexpected result is an unchanged market, this week, at least.

Here’s why. We discussed last week that whey production has pretty much stopped, as commercial use (schools, restaurants and their supply chain) has died a death, which has left whey technically unchanged, but practically short. On the other hand, skimmed milk powder is technically in oversupply, marked down a further €100 over the last week, but practically, processors aren’t selling into the void. Yesterday, Lacto Production saw market prices quoted at €1850 for SMP, but the cheapest actual offer was in excess of €2100.

So my analysis is that whey will probably shoot up to a new plateau, coinciding with a return to cheese production in a post lockdown world, but physically traded prices for skim milk will only slowly decline, and against a backdrop of a five week production window at Lacto Production, holding out for lower prices is a game for paper traders and not those needing to put product on farm.

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