Doesn’t look like it yet. Sweet whey posts unchanged again, but skim is only up €10. On the face of it, skim doesn’t look like the runaway train  it has been for the last fortnight, but don’t be fooled, as the squeeze does look genuine and not trader-stoked. 

Whilst cheese production is going flat out, there’s enough whey to meet increased demand. But the danger signs are there for skim milk, as downgrades have been offered recently at vastly reduced discounts, ergo there is less supply in the market generally. This is borne out by a steep decline in the production of butter.

As this is the basis for skim milk powder, it is hardly surprising to have seen the increases in price over the last month and equally, it is unlikely we will see any discounting soon. Quite where the production figures for April and May have gone isn't known yet but we've certainly seen the skim milk market lag behind this stark decline. So it seems fair to say that this market hasn't run out of steam yet. The graph below show skim well above the fifteen year average, but when the years dominated by EU Intervention stocks that ended in 2019 are taken out, the mid-€2000 price range looks like the new normal. 

Sweet whey on the other hand hasn’t been this consistently low since 2015, and is at if not below the cost of production, and is only there because of its byproduct status, held in balance by brisk cheese production, which is enjoying generally high prices (record for mozzarella). So if the cheesemakers remain blessed with high prices, it doesn’t look like whey will follow skim for the foreseeable future.

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