10 April 2019

Well, something had to happen, whey couldn't get any cheaper, and skim wasn't showing any signs of doing so, so enter the middle market! Some chancer managed to sell a couple of hundred tonnes of skim milk at €50 over the market and hey presto, skim is off and up again.

Looking at bald statistics, official figures show an increase of 30,000 tonnes of SMP exported in the first quarter of 2019 over last year, so persons unknown are still sitting on 90-100k tonnes of intervention sale stock. However, buyers have fond memories of market lows, and a year ago SMP plumbed the depths that we have seen topped by 40%. But look back a further year on the graph below, and the market had decreased to today's levels from a massive high, near €2k/t. Also note the same trend line for Q2, two years running.

So if whey holds its value, we could see further rises in skim. And it looks like whey will do just that. Cheese production was sharply down in Q1, and one Lactalis factory is on a two-day week currently. After recent inexplicable falls in whey, the Netherlands market has stabilised and the market could be ripe for traders bouncing it higher.

Looking at currency, sterling is still enjoying the relative calm of the least worst economic statistics from the G7, coupled with the mutually assured indecision of the two major camps in parliament. Whether we get May's preferred June deadline, Merkel's end of the year, or Macron's extension fenced with barbed wire remains to be seen, but whenever the new deadline may be, I've more chance of selling unicorn milk replacer than Parliament passing timely legislation for an orderly departure from the EU.

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


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