What a pretty pass! Here we are in peak Christmas cheese production (lots of sweet whey, no problem) but with critically low milk supply going into what should be peak milk production.

Sweet whey stabilised over the last week at €990 and is likely to remain plateaued and not reach the price peak of €1025 achieved in May this year. It’s an interesting historical graph, as whey just breached the €1000 mark several times between 2011 and 2014, and has tested the lows of €500 just once since, in 2016 (the record high was €1300 in Peak Oil in 2007, followed by the record low of €360 in the depression that followed in 2009). However, I’ve never been a chartist and trust tealeaves more than Fibonacci, so these strange days may yet deliver a surprise upswing in whey.

The problem is skim milk. The headline Dutch market price only posted a €40 increase this week, at €2620, but prices over €2800 have been paid in France to secure very limited quantities. The last time the market saw this kind of squeeze was the intervention sting that started in autumn 2018, when two traders forced the market up and doubled their money, from €1300 to €2500. That was withholding stock from a market that was broadly in supply/demand balance, which the processors were delighted to follow up. This time, the cupboard is bare, and I don’t wish to be a doom monger, but this market could test the 2014 record of €3200 before impoverished dairy farmers are forced to feed raw milk. I understand Arla hiked their milk price 0.3p/l yesterday, but it’s a slow tap to turn on farm, so brace yourselves for further increases in skim milk 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