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22 September 2022: When supply and demand both decline ...



Sweet whey posted unchanged levels this week, but skim milk broke ranks and rose €30 (+0.8%). These cumulative rises over the last month have seen whey powder up €80 to €980, so nearly 10% higher, and skim trailing at only €150 up to €3580, so about 4% higher. Whilst the vindication of my early August call is valid, the magnitude has been less than expected, and is of course being manipulated by outside markets, and the global battle between reduction in supply and reducing demand.


Looking around at the outlying markets, it has been a generally supportive week, as the Ukraine grain export deal is in peril, and the third cycle of La Nina in South America has been exacerbated by USDA plunging its soya forecast by 3%. The biggest affect has been on soya meal, up $30, leaving beans and soy oil broadly unchanged. Palm oil is interesting, as Malaysia reported a mighty 30% increase in exports, stimulated by generous duty relaxation, but this has been equalled by mega stocks in Indonesia, leaving the market net unchanged.


The biggest current worry in our markets is of course currency, with interest rate wars playing out between the safe-haven dollar and the euro, with the poor old pound losing out both ways, as the vast majority of economists point the finger at the questionable wisdom of Brexit. Today's widely expected 0.75% hike in UK interest rates seems sadly already priced in, so unless an economy-crushing hike above that is imposed, imminent strengthening in sterling looks improbable.


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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