FCMP
Price relaxation across the board
Europe
Fat pulls FCMP down, but price erosion is as yet limited
Some price decline was logical after what is happening with milk fat prices but with production being limited at the moment and still some demand in the market, price erosion of FCMP has so far been limited. Butter prices will remain crucial for price developments in FCMP but product for Q1 delivery is still sold for EUR 4050 ex works as supply for further out does not seem to be too abundant.
Americas
Downward pressure is beginning to build
As expected, in August ONIL absorbed quite some volumes out of Latin America, particularly for the more nearby arrival dates. This took some of the pressure away for producers in the region, and consequently the spot FCMP price remained steady in the past month, at USD 3800 FOB. However, with the flush around the corner the milk supply outlook is very good, particularly against last year’s weak comparables. This brings downward pressure to the market and as prices in New Zealand are also dropping Latin American prices will have to follow in order to maintain access to the world market.
Asia-Pacific
Good start of the Oceania season creates price pressure
At the early September session, the large volume on offer nudged the GDT price down. China was the main buyer on the event, also because the local milk production is going into down season. Post GDT the market price is about USD 3800 FOB, and the futures markets indicate that there is further downward potential for FCMP. Valorization-wise FCMP is not always the most interesting product of the dairy complex but during the flush it cannot be avoided. Given the progress of the Chinese local dairy industry China is no longer absorbing as much FCMP through the Oceania flush as was traditionally the case.
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