SMP/NFDM
Ongoing strong milk protein demand tightens the market
Europe
Sellers are in the driving seat
Sentiment in the EU SMP market changed drastically during the holidays and some buyers are in for an unpleasant surprise. SMP prices have risen as sellers are becoming a little more hesitant. Not only do they continue to witness strong buyside interest for concentrate, but there are also signs that concerns about the availability of milk are rising. This makes the skimmed powder market a true sellers’ market. There continues to be healthy buying interest both within the EU and on the world market and there are remarkably many buyers looking for nearby delivery still. It seems that most procurement budgets have yet to be finalized and there is thus probably quite some latent demand for SMP. Prices in the first week of September are EUR 3200-3300 ex works.
Americas
Hectic NFDM market turned bullish again
When Mexico returned to the market – which they always do this time of the year – buyers found themselves chasing offers in a very tight market. Domestic disappearance in the US is up by about 30% in the first half of the year and supply is tight anyway due to the increasing volumes of UF skimmed milk sold in liquid form. The current price level is USD 1.90/lb (4190/t) ex works, which is quite a step up from where we were only a month ago. The limited surplus availability causes US NFDM exports to focus on a small number of selected markets in Central America. Since SMP prices in the other export regions – the EU and New Zealand – are also going up, downside risk seems largely absent.
Asia-Pacific
Market tightens quickly
The SMP market is APAC is tightening, alongside the trends in the EU and the US. At the early September GDT the price rose significantly and the futures prices followed. Some of the buyers in the region are still in denial but there is a lot of milk powder that still needs to be acquired. China appears to be lightly stocked and locally produced powder is also getting more expensive, multinational buyers seem to have orders to gear up their safety stock levels and there are some tenders being issued. Some smaller deals have recently been done at levels of USD 3750-3800 FOB and more buyers are beginning to realize that there is little downward potential for the near term.
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