21 July 2022: Sell in May and Go Away?

I’m conflicted about this adage, specifically for feed raw materials, as ‘Buy in May and Go Away’ usually delivered for winter cover in eight out of ten years, before Peak Oil ripped up the rulebook. But this year, specifically for veg oils, and milk powders by association, shorting the market has yielded rich pickings for the brave.

Scant end user demand has allowed sweet whey to drop another €30 (-3%) and skim milk by €50 (-1.5%) this past week, and trader sentiment is that it could well fall moderately into early August, but beware, the curse of the summer holidays is nigh. Traditionally, when a slumping market is helped lower by what my old boss used to call ‘masterful inactivity’ (and he told me recently he reads this rubbish!) going into the summer break, there’s usually a nasty surprise lurking in the first week of September. There’s suddenly a rush to cover Q4, lead times shoot out from two weeks to six, and rocketing physical demand is mirrored by commensurate price rises.

I believe there is significant current buying activity for skim milk powder and especially sweet whey, but it's the middle market traders filling their boots, whilst end users blithely expect the slide to continue and sit on their hands. Let’s face it, sweet whey price is now below one year ago, and that was before poor northern and southern hemisphere soya harvests, food inflation and Ukraine. I genuinely fear that before the end of August, owning physical bookings will be the bird in the hand, rather than the two in the bush of yet lower prices.

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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