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27 July 2023: What's going on?


I’m not crying over spilt milk, but still wondering how it can possibly continue to spill. Sweet whey dropped another €20 (-3.5%) on the Dutch market, but skimmed milk held its price unchanged for July. Arguably, they should change places, as skim milk still has some producer margin in the bank, but whey is now so far below cost of production it beggars belief. It must be said again, though, that relatively few trades at lower levels in Holland certainly aren’t reflective of the French whey market, which actually rose €10 over the week and is now well in excess of €100 over the Dutch market.


Same old, same old is the reason for whey’s demise; the huge backlog of stock built up during the wholesale withholding of product that fuelled last year’s bull run. But how much lower can it possibly go? We are now officially in the silly season of vacation absenteeism, so transactions have slowed considerably, and we may not see a significant upward turn until later in August, but the collective return to the desk and a rush of short-covering may well light the touch paper.


The same thing is happening in other milk fats and proteins, and largely for the same reason. Wheat gluten production remains in the hands of four proud producers, who have largely ignored the collapse in whey and to some extent skim milk markets, but have now broken ranks. Prices have been slashed by up to €100 this week as producers chase scant interest. Likewise for fat filled whey, which is dominated by a single open-market producer, who hasn't seen the warehouse floor for a long while, and is now slashing and burning their own market to get the product back to previous inclusion levels in least cost formulation.


And what’s even more staggering is that global protein and oilseed markets are still raging as the US new crop soya swelters and the bumper Brazilian crop export pace heats up, with China back into the market.


The whole soy complex is up, with soy oil the weaker leg, but supported by crude oil topping $80 a barrel. Palm oil also put on a few ringgits in support.


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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