SMP
New Zealand powder is back in the game
Europe
Unprecedented price stability in euro terms
For the fourth consecutive month we report the EU SMP price at the level of EUR 2425 ex works and the market has felt stable these past four weeks. Supply tightened somewhat because of hot weather and the normal seasonal decline, but as demand is slow as well the prices did not move. The euro strengthened further against the US dollar and this pushes the export markets out of range for EU powder. Domestic demand within the EU is suffering a little from high prices for various consumer products in which milk powder is an ingredient.
Americas
Slightly more stable than expected
The weaker undertone that we reported last month is still there, but the prices in the US market have not dropped as fast as we expected at the beginning of June. At the current price level of USD 1.24-1.25/lb (2735-2755) ex works the market has found a new balance. The supply of milk in the main powder producing regions is not abundant but as demand is even more subdued there is little upward potential. Mexican demand is almost absent but that is not unusual for July, and going forward Mexican buying interest is expected to resurface. Export opportunities for MH powder are currently limited and therefore we expect little production interest in the coming months, which is atypical, as usually US producers start ramping up production of MH SMP for Asian demand in Q3 and Q4. The price discount remains about USD 3 cts/lb. Going forward the market feels stable with a weaker undertone, with the latter primarily based on weaker sentiment on the global market.
Asia-Pacific
Buyside can largely afford to wait for new season supply
In the last week of June the sentiment on the APAC SMP market was weakening already, and on the early July GDT session this was confirmed. Interestingly, though, there was quite some buying activity for nearby delivery dates, which currently trade at a premium over Q4 prices. This illustrates that buyers anticipate further price relaxation going forward, and that they only buy for nearby dates when they have to. The spot price is currently about USD 2785 FOB, but October delivery is available at USD 2700 and November/December at USD 2650. There is no buying interest in China at the moment and local resellers struggle to reduce inventory. Price wise New Zealand product is the most competitive on the world market, with EU supply hampered by the exchange rate and US supply flowing first to Mexico.
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