SMP
Price in US, EU and APAC are remarkably similar
Europe
Exchange rate fluctuations affect price direction
The SMP prices in the EU have stabilized, but that is mainly the effect of the weakening of the euro-dollar exchange rate. Had the euro strengthened the SMP price in euros would have been forced down in order to maintain access to export markets. The current market price is EUR 2150 ex works, same as we quoted early October. There is sufficient supply but the main question mark is what strategies the demand side will embark on once the insights gained on last week’s Gulfood conference are absorbed.
Americas
The NFDM spot price is remarkably resilient
The price for NFDM continues to remain quite high, despite the ongoing negative sentiment towards prices further out. The current high milk production does not translate into an increasing availability of NFDM as alternative outlets, such as MPC and UF milk, absorb significant volumes. The current price level for NFDM is USD 1.13-1.14/lb (around 2500/t) ex works. Demand is okay with Mexico having struggled with a bit of a supply squeeze some two weeks ago. Given Mexico’s short coverage strategy such an event is inevitable now and then. From December onwards milk production will start to rise seasonally and it will then become clear if the negative sentiment will finally take its effect on prices.
Asia-Pacific
Absence of supply pressure keeps prices stable
The price for SMP on the early November GDT session remained remarkably steady, particularly considering the time in the milk season. Good demand from China and slightly lower volumes on offer for nearby delivery periods worked hand in hand in this outcome. Post GDT there is a lot of activity from buyers all over Asia, who are apparently comfortable with the current price levels and are looking for opportunities to secure product for Q1 and sometimes even Q2. Oceania SMP is on offer at USD 2600-2650 FOB, but EU SMP and, to a lesser extent, US MH powder, are easily absorbed in Asia at levels around USD 2550-2600 CIF Asia.
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