FCMP
Southern hemisphere season creates room for prices to come down further
Europe
Sell side stocks are becoming uncomfortable
The EU FCMP market is a little oversupplied, as during October some parties were tempted to produce batches that they had no buyer for yet. It now turns out that the chocolate industry is not willing or able to absorb higher volumes of FCMP, leaving unsold volumes in larger quantities than preferable. Valorization versus SMP and butter/cream remains good but FCMP has a much shorter shelf life than SMP. Export opportunities have not improved either with the decline in prices in New Zealand and Latin America. The market price in the EU is now about EUR 3400-3475 ex works.
Americas
Price pressure continues to build
Supply pressure is building in Latin America, with double digit production growth in Argentina and Uruguay as well as good circumstances in Brazil for local milk production, which limits Brazilian import requirements. New Zealand’s competitiveness is improving swiftly and the prices in Latin America will have to follow suit. So far the LA FCMP price has taken small steps down to the current level of USD 3650 FOB. There is some buying interest in Brazil for Q1, but the forward curve of the foreign exchange rate makes LA FCMP very expensive and deals do not materialize at the moment.
Asia-Pacific
Buyers are leaning back
The FCMP price in APAC continues its downward trajectory, in line with the falling prices for milk fat. Several of the largest buyers in the region can afford to wait until the prices come their way further. Outside of GDT the price range is now about USD 3475-3525 FOB at which level there is actually more sell side than buy side interest. A look at the futures markets indicates that further downward price movement is expected.
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