Brexit and the price of milk in the UK and Spain

Sooner or later I had to talk about the B word. Let's go with it!
It is commonly accepted that prices in the UK, in general, are higher than in Spain. Salaries too, but in general it is assumed that the cost of living is more expensive in the UK.
In general this is so, but there are some products that are way cheaper in the UK than in Spain and the differences are quite noticeable. One of the ones I find more surprising is the milk.

It so happens that milk is cheaper in the UK. Depending on the size of the bottle the price varies, the bigger the bottle the cheaper the litre, but in general lets assume that the average price is 44 pennies. Today, after the pound has plummetted thanks to Boris Johnson, we can assume the price is the same in euros, but, assuming a normal situation when the pound is about 1.10 euros, to round it up, I'll assume 48p per litre.

This very same litre of fresh mik in Spain costs around 1.13 euros per litre. This is the cheapest price I've found in all the supermarkets checked, so I'll use it as a reference price. I insist: 1.13 euros, More than double the price in the UK! And in a country where the cost of living is supposed to be way higher than in Spain!
Even more, in Spain, the pausterized litre of milk, the famous "brick" format, which it is supposed to be of lower quality and hence is cheaper than fresh milk, in Spain costs around €0.58, More expensive than fresh milk in the UK!

How is this possible? This is the big question here. And sadly I have not reached any valid conclussion. My initial thesis when I started this article was that the difference was due to the production quotas or limits imposed by the EU to Spain and so I'd then ellaborate that the UK has no real reason to leave the EU, at least this one would not be a motive for the UK but for Spain.

However, my hypothesis proved to be false as since 2015 there are no limits to the production of milk in Spain and so the sector can produce as much milk as they want, what in theory should benefit the consumers as prices should go down thank to the competence among the producers.

Then, why the price is so high in comparison to other places like the UK? In addition to this, the milk producers are constantly complaining of the low prices they are paid for the milk, as it seems that they should charge a minimum of €0.33/0.34 per litre to make it a profitable business. Keep in mind that in the UK the price is £0.44 per litre, final price, not producer price. Maybe in the UK the margin for the farmers is greater as they don't need to buy grass to feed the cows, but I don't think there is so much difference at the end of the day.

So, I cannot blame the EU. The only ones I may try to blame are the intermediaries and the big corporations that buy the milk to the producers, that would be adding an artificial cost in the whole process for their benefit, keeping low prices for the producers and high prices for the consumers in a typical monopolistic practice, but I have no data to sustain this theory. That, or maybe the one to blame is climate change. I have not a winner!

Investment strategies: Investing in crude oil

After what just happened in Saudi Arabia, it was quite easy to foresee a spike in the oil price.
 It was something I was expecting after the troubles with oil ships and the Iranian forces in the Strait of Ormuz this summer, so although I hadn't found the time to write this article recommending to purchase futures of oil, the thing is that the past 9th of August I made a "purchase" to test my theory in a more practical way (with fake money in my trial account opened at Oanda, so I'm not risking any money - and not winning any real money either).
Here you have a screenshot with the summary of the positions I have opened at this training account:





As you can see, the only investment currently in green is the Brent Oil investment. The other ones are positions I keep in Sterling Pounds (Does anybody still use the word "Sterling"?), as I'm betting that there will not be a Brexit, at least not a hard one, and thus Pound will spike eventually, as well as Euro and Dollar will reduce its value. We've just seen that the Fed has just reduced the interest rate and in my opinion the Euro will follow suit soon. But this is subject of another entry in this blog.

When I "bought" the oil futures, the price of the barrel of Brent was $58.8. I estimated that in the medum term it would escalate up to $70. This prediction was fulfilled this week, so if this was a real investment I'd had sold all my positions and got the money earned, about €1500 over an initial investment of 10,000, about a 15%, not bad for some more than a month.
But, as it is a fake money account, I am keeping the position, and have programmed the tool to automatically sell the options if they reach more $70. We will see if the situation happens again until the end of the year, which I doubt, sincerely.
In the mid term, I think oil has already reached its peak and this prices will not repeat any soon, so the possibility to repeat this gains is remote, in my opinion, unless a war breaks in the zone or again the oil supplies are affected by a blockade of the strait of Ormuz or any similar situation.
In summary, in my humble opinion, the moment to invest in oil has just passed, as it was this August when prices were already under $60 with possibility to reach $70, which has already happened and thus it is time to wait and see.