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4 June 2020: China Syndrome anyone?

In short, SMP is up and SWP is unchanged.

Skim milk powder has jumped €100 on both feed and edible grades this week, which whilst it has a strong upward effect on prices, brings my recent theme of the real world versus imaginary prices to a close, as the market prices posted now are achievable. Stories have been circulating about the possibility of a northern European drought reducing milk production, but that’s plain facile, as one only needs to look at the graph below of SMP prices over the last decade to see that the last time we saw extremely arid spring conditions, we also saw the lowest SMP prices of the decade. It shows the recent uptick, which is 10% higher over the last month.

To be honest, I can’t see many factors to support a sustained rise in SMP. The greatest factor cited for the bull run of 2019 was Chinese demand for SMP for beef production during the collapse of their pig industry due to ASF, but recent reports have Chinese pig production up 20% since January, so that fact doesn’t support SMP. Demand from catering is only returning to ’normal’ levels, albeit slowly, so again, that is hardly bullish.

Whey continues to flatline, unchanged again this week, but there is little news to predict a collapse in the near future. Quite the reverse, if demand from South East Asia continues apace, so the next move could well be higher, certainly if the skim price escalates further. Interestingly, whey is bang half way between the highs of 2012-2014 (€1000) and the lows of 2016 (€500), so it certainly has more headroom, if one believes in predicting the future from the past.

Sterling continues to wallow with Brexit jitters against the euro, briefly topping €1.1250 on Tuesday, but is enjoying more strength against the politically embattled dollar.

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


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