DCA benchmarks: Proteins commentary week 18

The market for high-protein whey products in recent months has effectively become a WPC80-driven market. Prices for nearly all other products are largely derived from this benchmark. Meanwhile, WPC80 prices continue to rise. Producers are currently asking around €23,000 per tonne for instant-grade material—and are generally able to secure these levels, sometimes even higher.The key question for some time has been: how far can and will prices continue to increase? Market developments indicate that prices are still on an upward trajectory. This is driven by ongoing market expansion combined with limited production capacity. Although new drying towers are under construction, they are not yet operational. Moreover, it remains uncertain whether the additional capacity will significantly ease demand. It is likely that a substantial increase in production capacity will be required before demand can be meaningfully satisfied. This at least reflects the prevailing sentiment among producers and traders.At the same time, it remains a reality that a portion of available whey cannot currently be processed into powder or higher-value WPCs and WPI. Even large cheese producers are still downgrading whey due to capacity constraints.As a result, companies seeking high-quality WPC are increasingly turning to the standard whey powder market as a feedstock for upgrading. Prices for food-grade standard whey powder have therefore risen to around €1,900 to €2,000 per tonne, although benchmark levels remain slightly lower. Existing users of this whey are finding it increasingly difficult to secure supply and are being forced to seek alternatives. The feed industry is also experiencing similar challenges to some extent. A side effect of the high prices for standard food-grade whey powder is that comparable product from other regions is becoming increasingly attractive for the European market. U.S. dry whey is currently priced at approximately €1,320 per tonne on a converted basis. While this may still be slightly too expensive to import into Europe when duties are included, the tipping point is approaching. Such developments could help to ease market tightness, although this is not yet evident in practice.