I’ll fulminate in the following paragraphs on the science of predicting future prices from those past, and stick to the last week’s facts. The big news is that skim milk powder has bombed out getting on for 5% in the last week, now 13% off recent highs. But sweet whey has seemingly bottomed out, unchanged at €890 on the Dutch market. Skim milk fell even more dramatically in outlying markets, as stores continue at capacity and buying demand remains hand-to-mouth.

Milk powders continue to follow their own path, as vegetable oils head the other way. Soya beans and meal have stayed pretty static over the last week, but bean oil has risen an eye-watering 20% since the beginning of this month, from 61 cents to 73. Even its poor relation palm oil has jumped 30% in lockstep during October, as fears of monsoon disruption to the main production season gain more traction than rather poor export figures. It is the worsening Black Sea crisis that lies behind this vegoil hike though, as Ukraine is critical in global sunflower oil supply.

So where are milk powders heading? Arguably, sweet whey could already be at point U on the fibonacci graph above, as it approaches the base line of production cost alone, but anyone in farming is used to long periods of producing with negative margins, so we may see whey go below the line, before the predictably savage increase as towers switch the skim. But where is skim on the graph, point S or L? It’s anyone’s call, but mine is unsurprisingly that it has potential to fall maybe another 10% before it’s caught in the safety net of connected commodities rising.

Oh, and it’s not a fibonacci sequence; it’s a schematic for designing ski jumps.

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