Europe

EU origins are in demand in the international market

Most SMP transactions are happening in the EUR 2925-3025 ex works range but the full trading range is wider since high end international buyers are turning to EU and are willing to pay prices up to EUR 3150 ex works. On the bottom end of the market some Eastern EU origins still trade as low as EUR 2800 ex works. Although “low” becomes a relative term in the current wild SMP market, as these lower tier price levels are still some 8% higher than the average trading price of early April. It is mostly import demand from many virtually all major regions – even Canadian buyers ask for EU product – that is pulling prices upward at the moment. Even though dryers are running at full capacity in the EU this time of the year. 

Americas

US NFDM price at record level

The fundamental situation of the USD NFDM market remains unchanged with limited production of NFDM pushing prices upward. Milk protein is in high demand for protein fortified consumer products such as consumption milk and yoghurts. Another substantial outlet are the cheese factories that boost their production volumes by adding skim solids for standardization rather than selling off their cream surplus. This means that NFDM production is largely restricted to the West Coast regions, where there are relatively fewer cheese production facilities. Demand for NFDM is good, both domestically and internationally. Exports are no longer feasible, except to Mexico, where buyers have few alternative origins. The spot price for NFDM continues to rise and is now reaching the record level of USD 2.25/lb (4960/t) ex works. The futures market remains backwardated and even though the futures prices for Q3 have risen to USD 1.88/lb there is no actual trading being done at those levels. In the graph and the paragraph below we put things into a longer perspective by reflecting on the price developments of the past 10 years, which clearly outline the extraordinary height of the current price level.

Asia-Pacific

Healthy demand supports the market

Healthy appetite on the early May GDT event supported the SMP price in Oceania. Chinese buying was almost record-low but SE Asian buyers made up for this and sourced both Oceanian and EU origin. Both during and outside of GDT Indonesian buyers were active as the school milk program continues to absorb a large chunk of the domestically produced fresh milk, pressuring companies that use milk as an ingredient to rely on imported powders (SMP and FCMP). Most of the current spot and near term demand in Asia comes from relatively smaller parties, as the multinational buyers are well stocked until the end of Q3. Oceanian supply is limited now during the off season and importers are turning their eye to the EU, where good quality SMP can be sourced around a price of USD 3750 CIF Asia. Note that for instance in Indonesia a 5% quota charge applies for EU powder which eliminates the price difference with Oceania origin to a large extent. Oceania origin is currently traded at USD 3900-4000 for first tier quality, whilst second tier product is available at about USD 3750-3850, both CIF Asia.

The spot price for US NFDM has been moving sharply upward in the past couple of months and has now reached a level of USD 2.25/lb, which is almost USD 5000/t. In this graph we have plotted all the NFDM prices we published in Market Watches over the past 10 years. The graph illustrates that in this period the price has rarely surpassed the USD 3000/t level, and has only briefly, in March and June 2022, crossed the USD 1.80/lb or 4000/t mark. In these months US milk production was hampered by disease and adverse weather which caused the price for NFDM to spike for a while. The circumstances right now are quite different: milk production is far from limited, but the alternative outlets for milk provide better valorization and this hinders a larger output of NFDM. With the ongoing demand for milk proteins worldwide it is unlikely that US NFDM will drop back to levels below USD 3000/t. It feels like the new price floor may settle closer to USD 4000/t going forward.