24 February 2022

I’ll keep strictly on topic this dark day, other than to mention all overnight futures markets are limit up, as is the safe haven dollar.

Both sweet whey and skim milk powder put on €20 over the week, so are back in step. The interesting factor is that the market is entirely controlled by traders rather than manufacturers at the moment, with freely available product that was purchased from producers up to 6 months ago, with commensurately large margins. When a market gets to this stage, it usually signals a sell-off as soon as the first trader jumps on the down escalator.

Fat filled whey and what gluten remain the only products that are physically short, and still critically so, with part loads being delivered against full load contracts, when available.

Maybe history can teach us something here. In the 2014 annexation of Crimea, the milk powder markets dropped 45% in a month. In 2019, a million yellow-jackets took to the streets in France, protesting about fuel at €1.50/litre, whilst today it has topped nearly €1.70 with no reaction, yet. Whilst the market momentum is currently politically driven rather than supply/demand fundamentals, trying to call the next direction is pointless, but if the political situation stabilises, it seems a fair call to predict the milk powder markets easing in Q2.

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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