The image above represents the continued surprise and anguish of an industry that wilfully starved the market through the Ukraine spring, as it continues to plummet. Both skim and whey are down 4% this week, €100 and €30 respectively.

Not that there is a discernible link, but the oil leg of the soya complex has been the weakest, again down 6-7%, whilst beans and meal have drifted, on timely rainfall in Argentina and surprise, surprise, no crunch of Chinese buying boots. I suspect the expected post-Covid boost of Chinese demand for proteins and oils is a long-holder’s dream, and the funds have really bought into a record long book. However, it is Chinese New Year, so commercial activity is limited. Palm oil continues to drift, with lower exports and a stronger ringitt the main drivers.

The biggest problem for CMR pricing is the fat-filled whey and wheat gluten. Both products are controlled by a handful of producers and no meaningful middle market, so while the processors are sitting on expensive purchases, there is no appetite to slash and burn on price. Whilst sweet whey prices have halved since April last, fat-filled whey has only shed 7%, and this essential component is limiting the downward potential of calf milk replacer pricing.

Milk processors and cheese producers are both reporting reductions in throughput, thus the supply side looks more limited than reticent buyers may expect, so I expect the graph to show a deep V when this market turns, as it no doubt will.

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