16 October 2019: Skim exports hike market

No relief for skim milk powder, as a couple of big export orders have shunted it up yet higher. An Algerian government tender for 40,000t edible SMP was the biggest, which is a year's worth, whereas that country usually buys twice to four times a year, so a clear signal that they don't expect the market will break for some time yet. Cuba similarly bought a 17,000t slug, which has pushed feed grade SMP up a mighty €50 over last week, now a whopping €300 higher since the beginning of September. Surprisingly, given the large export orders, the edible market only rose €20 in the Netherlands over the week, the smallest rise we've seen for some weeks, so perhaps a sign the bull run is starting to stall?

Whey traders are talking a good fight, shunting the market up €15 in France and €10 in the Netherlands, but there is no perceptible squeeze in supply. Demand is still dire from Asia, Lacto Production's sales are down over 50% to the region, which is in line with the fall in demand. The US market has ranged between €200 and only €90 discount to Europe, currently at €130 lower, having shed €200 since January, but it has continued to decline, whilst Europe has bounced by €50. That fact alone suggests US exports to Europe can't be far away, and will likely hamper traders' attempts to hike the European whey marks much higher.

Sterling continues to amaze in its comeback, despite the rejection of pretty much everything by the DUP. But now the chief lemming has told his ERG flock that compromise is suddenly required, despite the purported deal being May's package reheated, business confidence indicates that something short of a no-deal plunge into the abyss will happen - even if it's a three-month extension and Boris does end it all in a ditch.

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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