26 May 2022: Psst, wanna buy some milk?

The headline news this week is that European milk production is down 1.6% over the last month, when traditionally it should be heading north. Unsurprisingly, it has caused a divergence between sweet whey and skim milk.

The Dutch market, the hub of the European market shows whey losing €20 (-1.5%) but skim milk reversing the slide, up €50 (+1.3%). On the face of it, that isn’t surprising, as the cheese market, particularly mozzarella, is winning market share, which equals more whey and less skim. But the world is upside down at the moment anyway, and the fact that the cream price is currently higher than the price for butter bears that out, so traditional metrics aren’t reliable.

One other noteworthy comment I picked up is that the skim price in France has fallen considerably in the last days, with pretty much zero buyer demand, but in Holland and particularly Germany, it’s either traders or genuine buyer demand that has reversed the slide in skim milk prices. And the price difference is far larger than the haulage differential between western France and Benelux, so I can’t see the French slide sustaining.

Looking at the the wider markets, the news that the Indonesian Government has eased the palm olein export ban (whilst pegging domestic price and tonnage) was met with an increase in palm oil prices globally, and that in the face of ideal cropping conditions. The soya complex has seen beans as pretty much neutral, with meal up $20 and oil dipping below 80 cents for the first time in a month.

We may see whey slide some more, but I suspect our friends the traders will helpfully support the processors struggling with less milk supply by hiking the market 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

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