SMP/NFDM
World market dynamics dictate price trends in all major origins
Europe
Bright weather good for sellers
Once again the prices in our main three origins are closely aligned. SMP is the most commoditized product in the dairy complex and suppliers need access to the export markets to sell excess product. The EU SMP market prices have, like last month, been a little volatile since the previous Market Watch report but are now again settling at a level that is not very different from our early July quote: EUR 2900-3000 ex works. There has been decent demand recently even for quite nearby delivery dates and EU sellers have been able to secure some export deals to parties that usually buy Oceania product but noticed that there is no such product on offer for prompt delivery. Nevertheless, the EU is in a holiday mood and the market is a little thin. The EU sell side is quite relaxed and confident and expects an upward price trend once business resumes at the end of the summer.
Americas
Slightly higher demand creates a feeble balance
After several months of declining prices the trend reversed at the end of July. Mexico came back to the market at modest volumes and the price for NFDM bounced up a little. This has begun to trigger hand-to-mouth buying with most customers focusing on short term deals. Fundamentally the market situation is unchanged; milk production volumes remain strong but cheese and liquid skimmed milk remain the preferred destinations. This keeps the availability of powdered formats constrained. There seems to be a certain balance in the market at the moment. The current price level is in the range of USD 1.55-1.60/lb (3415-3525/t) ex works, and there are many eager buyers at lower levels, a sign that the downside is limited. The market is very price sensitive and any movements on the CME spot call are directly reflected, even though physical trades continue to be done at a premium over the spot call.
Asia-Pacific
Stable to firm market
Oceania origin is cheaper than EU and US even after the price rise on the early August GDT and there may be some further upward potential. This is also suggested by the futures curve. At the moment the APAC market is stable to firm and the price for Oceania SMP is USD 3250-3300 FOB. Demand is building but local buyers are hesitant to step in, as the flush is about to start and volumes will gear up quickly. However, as some of the multinational buyers in APAC have started to secure volumes for Q4 and beyond, downside potential feels limited.
Nice to know
For many years since the famous Times Magazine article about butter in 2017, milk fat has been the dominant contributor in the total value of milk. However, due to the protein boom that accelerated in the last 24 months, proteins recovered a lot of lost ground. The graph below is a very simplified way of visualizing this development since most of the new value is actually captured in liquid formats. Still, due to the resulting reduction in availability of dried formats, NFDM prices have developed very favorably as well. Against the background of still very strong milk output in the US, butter prices have fallen accordingly whereas protein markets and NFDM prices have been remarkably resilient. As a result the protein contribution in milk in relation to milk fat has now more or less returned to the pre-2017 averages.
Need market insights or sourcing SMP/NFDM?
Speak with your local Interfood specialist
Our team closely monitors global dairy markets and works with a wide network of milk suppliers. Whether you need market insights or reliable milk supply, Interfood specialists are ready to help you navigate the market.
Contact us
More insights
If you're interested in SMP, you may also like these topics:
