8 August 2019: Book your forward sterling, skim will probably only decrease slowly

Updated: Aug 12, 2019

Sorry for the late posting this week, but perhaps it has served well to wait for the release of the negative UK economy figures, which have pulled the carpet out from under sterling, as threadbare as it already was (currently sitting at €1.0760/£0.926). The 0.2% negative growth figure is the worst since Q4 2012, which in turn was preceded by an astonishingly good Q3 2012 figure, the reasons for which are lost in the mists of time in my muddled mind. In other words, it's the worst figure since the aftermath of Northern Rock going belly up. Quite where the pound goes from here is down to the political manoeuvring about which side of Halloween we get an election, although I predict the EU will give the UK a Get Out Of Jail Free card to rejoin the EU after an engineered crash out of Europe.

Unusual as it is to start with our beleaguered currency (anyone for wheelbarrow futures??), the milk powder markets are at least calm. Skim is still managing to maintain unchanged status, despite a €20 hike in edible skim in Holland, with traders determined not to break the market. What is surprising is that given the USA is awash with milk with nowhere to go in Trump’s dystopian trade world, and prices for US lactose and whey have fallen out of bed, more US towers aren’t switching to skim production. Having said that, it can’t be long before the price differentials between US and European lactose and whey in SE Asia (the US being far the cheaper) translates into the US dumping in the EU. Should that happen, it will be deep into Q4 before the spot price slides, but it remains a potent threat.

So in summary, book your forward sterling, skim will probably only decrease slowly, if at all, and whey could slide, but not imminently.

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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