The market pendulum continues its upswing with growing momentum this week, with whey up €20 and skimmed milk powder a whopping €60, coincidentally both 3% higher on last week.
Looking at skim milk powder first, it looks like a return to fundamentals (at last), as the milk powder mountain sold out of Intervention in 2018 has finally disappeared (and ginormous profits trousered) and we’re back to pure supply and demand dynamics. Bull factors include a liquid milk market still in summer undersupply and autumn calving demand kicking in, but on the bearish side is the weak dollar meaning the Americans are scooping up global demand and leaving Europe technically long. Balancing those two forces suggests to me that we’ll see the September and October markets rise, but could see the market break before the more traditional year end downturn.
Whey is harder to read, but susceptible to the same influence of dollar weakness meaning the US will continue to snaffle whey business into S E Asia. That market is rebuilding fast after ASF, so the global supply v demand is supporting prices, and it wouldn’t surprise me if whey continued to rise, even if skim peaks/breaks.
The Pound is strengthening on little more than it isn’t the dollar or the euro, it seems. Maybe the Government’s 13th U-Turn will be to agree the Post Brexit trade deal?
BDC agri is the UK broker for Lacto Production milk and whey powder products.
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