Not quite time to say Mass for the poor milk producers who have exceeded the speed of price rises and caused an explosion in unsold stock, but it might come to that. Skim milk has dropped €50 this week (-2%), and sweet whey €10 (-1%), but the two markets remain very different in terms of supply, whilst both having the same fundamentals.
Taking skim first, it is clear that old stocks, and I don’t mean downgrade material, have been sitting in store whilst processors rode the price wave higher, and are now having the cobwebs dusted off and being thrown at a market largely devoid of buyers, who rightly smell blood. One simply can’t have sustained price hikes for the product (butter) and the by-product (skim) when the raw material cost remains pretty much flat.
Which brings us on to sweet whey, which has the same fundamentals (higher cheese price and byproduct), but no sign of the burdensome stocks. Yet.
There is still genuine difficulty in finding spot whey supplies, and although there is a stark €75 price differential between Netherlands and cheaper Germany, this is not indicative of actual offers in the market.
Other markets are surprisingly supportive, as sunflower oil is nigh on 50% higher year on year, and at a two year high, palm oil is close to a three year high (the bonkers plan for 50% biodiesel mandate in Indonesia next year) and coconut oil is sharply higher.
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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