Arguably, whey powder has already gone over the edge, as it is down €40 on last week, and nigh on 8% lower from the end March highs. Offers from traders vary by as much as €240 over the week, so panicsville looks like it's setting in. It's a different story for skim milk, though, as it is resolutely unchanged this week after last week's surprise drop. Offers aren't burdensome, but are adequate to meet muted buyer demand. What's holding the market up is not only the Indonesian RBD palm olein export ban, but the more worrying ban on fat filled whey, as Indonesia accounts for 60% of world supply.

World milk powder markets are in retreat, USA is falling and the Global Dairy Trade index shows a cumulative 8.5% drop in the last fortnight. Background markets are weaker, soya beans, meal and oil all shedding circa 5%, and palm oil likewise, despite the above.

My view is that we're looking at the beginnings of a large correction at best, rather than a market collapse, as the global food balance sheet isn't long, and the poorer South American soya harvest and delayed planting in the US is unlikely to sustain the index markets' fall.

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