Sweet whey drops nearly 3% to €680 (down €20) and skim milk powder falls 2% from €2410 to €2360. 

We are told sweet whey is now below the cost of production. We also found out there’s rather a lot of stock about. We know that China isn’t back in the spot market and probably not for the foreseeable. Therefore, it is a reasonable hypothesis for driers to cease production and switch commodities. Only skim milk is in the same muddle, as there are copious quantities being thrown at or below the market price, with increasingly large parcels of offgrade material coming out of the woodwork. Now the Dutch December figures have been published (I did tell them to pull their socks up when I was over there last week), production is back up to nearly 5000 tonnes, which while still lower than average, supports the higher stocking theory. 

So what is the least unpalatable solution for the processors? Stand idle or produce at a loss. The answer to that question will dictate the longer term trend for milk powders, but for the moment, until stocks are mopped up, it looks like further easing, which in turn isn’t encouraging buyers into anything but hand-to-mouth ordering.

Soya is taking a breather in the otherwise downward drift, and palm oil follows suit, as crude oil is broadly unchanged. So no excitement from background markets.

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