SMP
Prices are on the rise
Europe
Latent demand keeps on surfacing
The SMP market is firm. Last week’s GDT session provided quite some support as it proved that there are enough buyers that still need to procure product for September and October delivery. The EU milk supply is not plentiful, particularly from a content perspective, and the current high concentrate prices provide a floor for the EU SMP price. The market price is now around EUR 2400 ex works and despite the occasional offers from parties that carry stock below this level the forward tendency is rather firm.
Americas
US NFDM relatively expensive vs EU and NZ price levels
The US NFDM market is stable, as the lower supply because of disappointing milk volumes and content levels is paired with sluggish demand. Producers of NFDM compensate for the slow buyside activity by boosting Medium Heat SMP output for sales to export markets beyond the American continent, as Mexican import demand is very timid as well and shows no signs of recovery. This all means that the NFDM price is likely to remain rangebound for the next few weeks. The sell side currently aims at USD 1.24/lb for NFDM, but the occasional deals that occur in this holiday period are generally at USD 1.21-1.22/lb (2680/t) ex works. MH SMP sells at around USD 1.14/lb ex works, which means that the spread, though much larger than the general USD 3 cts of the past few years, is still sufficient to cover for the cost of standardization.
Asia-Pacific
Sound demand for new season SMP
In the second half of July trading activity slowed down as the market lacked direction, also because of the three-week period between the mid-July and the early-August GDT session. With the approach of the Southern hemisphere production season the buyside is quite relaxed. Last week's GDT session produced a relatively small price decline in SMP, which is in view of the big volume increase actually a strong signal. Particularly for Sept and Oct delivery there was significant appetite. Post GDT the market remains lively, with SE Asia consistently buying at slightly higher prices of around USD 2650 CIF Asia. It is likely that in the past month most of the old-season stocks have been sold.
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