The market has pulled the ripcord on the parachute and descent has slowed somewhat, at least on whey. Skim is down a whopping €90 on the week (-3.7%) but whey has only shed €10 (-1.3%), so we could see the bottom of the whey graph ere long. Skim is arguably the softest of the two markets, as its fifteen month climb was artificially engineered. Quite how the virus pandemic will drive milk powders is hard to call, as the backdrop to falling consumer demand is unlikely to follow through in animal feed demand in the short to medium term, and a reduced workforce is arguably a bullish factor. However, the fall in the markets has coincided with the global spread of Covid-19, and the virus is still being cited as the main reason for the slide in milk powders.

Currency is interesting at the moment, with the precipitous drop in the Pound being blamed on the mere possibility of easing UK interest rates, whilst the US$ rode out their actual interest rate cut with barely a wobble. When the global economy is reckoned to drop by 1.5%, it makes no sense for the Pound to take the beating it has suffered last week and this. Its next direction is likely to be influenced by the opening round of trade talks with the EU, so the next move will probably be further down; classic ’sell on rumour, buy on fact’.

Our current global woes of pestilence, bush fires and tempest is a bit like watching the Old Testament on catch-up …

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