I give up trying to read this market. Last week, it looked certain to be running out of steam, yet this week we are served up with a whopping €50 increase in skim milk and €30 increase in sweet whey powder. However, what is significant is the number of sellers coming out of the woodwork, and to be fair this had already started last week so it is surprising to see such large increases posted.

This certainly has the feel of a market topping out now, as we are maybe seeing the last stocks being sold off before year end. After a terrible period for the purchasing manager scratching around trying to find physical material, we are perhaps now going into the uncomfortable stage of having to buy forward on a bull market just in order to take delivery when the spot market will possibly be falling. One has to own physical material to run factories/farms despite what the spot market conditions are, when the production period is extended and middle market traders are trying to dump expensive purchases.

Here is a table showing price increases since January this year for key ingredients in milk powders, which is pretty stark.

Even if we do see a long overdue correction, it seems unlikely we will see last year’s prices unless the world economy crashes 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