Europe

EU still hesitant to reduce prices in line with global market developments

Price developments in SMP this September feel counterintuitive as in recent years prices in the initial weeks after the European summer holidays used to go up when buyers returned and covered their need for the rest of the year. However, with milk production going up in all major EU-countries and demand being silent, prices went down in recent weeks. Product is traded at EUR 2325 ex works, which implies that - although still considerable - price declines on the protein side are mild compared to developments in the fat side of the dairy market. Buyside interest is OK, especially in Europe’s nearby markets like the Middle East but EU manufacturers are still reluctant to align their prices with offers from other origins.

Americas

The price drop in the front end of the market does not fully reflect the weaker sentiment yet

The limited sell side stocks continue to support the spot NFDM price to some extent, but the futures market reveals the real - weaker - face of the US market. While spot prices still linger around USD 1.24/lb (2735/t) ex works, backwardation is now occurring in the futures market, with Q4 at USD 1.22/lb and Q1 at USD 1.21/lb. The supply of milk is good, even though the US is close to the lowest production months, as the negative factors that hampered last year’s milk output have disappeared. The domestic demand side is sluggish and Mexican buyers, though reappearing after the holiday period, are obviously taking it easy and are in no hurry to build inventory. The spread with MH SMP has widened to about USD 6cts/lb, but even so US product is not competitive on the Asian market. 

Asia-Pacific

Sales pressure at the start of the new season forces prices down

Given the large volume on offer on the early September GDT the market anticipated a negative price trend, but the actual price dropped further than was widely expected. Chinese participation was good, but SE Asia and the Middle East stepped away from GDT, as apparently local stocks are comfortable enough for the moment. Post GDT the market price for SMP settled at about USD 2650-2675 FOB at which level there is some buying interest. Further downward potential is probably limited, given the carry in the futures market, where for Q1/Q2 the quotes are around USD 2850 FOB. 

SMP and NFDM have been trading in quite a narrow bandwidth in the three main export regions for the past two and a half years. When we look further back there is much more price variation, with the lowest levels of early 2020 and the peak levels of spring 2022 both caused by the disruptions that Covid caused to the supply chains and consumption patterns. The price alignment for early August 2025 is quite remarkable.