SMP
War in the Middle East creates a lot of tension
Europe
Geopolitical changes boost volatility
The escalation of the conflict in the Middle East creates a chain of uncertainties as currency, freight and energy prices may shift depending on how long the turmoil persists. Even though the effect on the current market prices is as yet limited there is an upward tendency with producers stepping away from further forward sales and buyers getting a little nervous about their procurement strategy. Availability of milk and concentrate are good and all powder production lines are fully operational but the tightness in the US NFDM market has been pulling the EU SMP prices up to the current EUR 2550-2650 ex works level.
Americas
Low availability
The US NFDM market continues to be tight. NFDM production has been subdued for many months now, because of superior valorization of protein in alternative products, such as UF milk and cheese. Even though we have seen some NFDM suppliers catching up slightly in their delivery backlog most of the powder that is produced has already been sold. There is virtually no availability in the Midwest and the East but the situation is a little better in California. Demand easily outpaces supply, both domestically and from Mexico where there is constant appetite. The current market price for spot – which is April delivery at the earliest – is USD 1.64/lb (3615/t) ex works. This represents a USD 0.12/lb premium over the futures price for April. The NFDM futures prices are backwardated, but the sell side does apparently not concur with a looser outlook as suppliers are generally not interested in further forward deals. As long as the prices in NZ and the EU continue to climb, the floor in the US market rises accordingly.
Asia-Pacific
Turbulence and nervousness increase in the Asia Pacific market
The Asia Pacific market remains very turbulent with logistic challenges caused by the Iran war adding fuel to the fire. Although the NZ supply situation remains difficult to gauge Oceania availability seems limited to non-existent. Therefore, buyers are reluctantly looking for alternative Northern hemisphere origins. There still seems to be a lot of unfulfilled demand for April to June. Chinese buyers are even outpriced at times by other Asian buyers so opportunities for US and EU sourced powders are improving. Prices are at USD 3400 FOB.
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