FCMP
Sentiment and market fundamentals cross swords in APAC
Europe
The EU butter price dictates the FCMP market
During February the price for EU FCMP was gradually dropping in line with the butter price and some expected that for the first time in four years the EU might be able to participate in the ONIL tender that the market new that was coming. However, the sudden U-turn that the EU butter price made pulled the FCMP price back up and this meant that EU powder remains far too expensive to be made unless an order has been secured. Deals for Q2 delivery are now done at EUR 4350 ex works, which is the correct price level valorization-wise for the fat content. The market balance is fragile though as it is determined by the events in the EU butter market.
Americas
Slow Brazilian demand pushes Latin American supply towards exports
The fact that Latin America booked a big chunk of ONIL last month indicates two things: firstly, Latin American exporters prioritize Algeria above Brazil at the moment. Secondly, we may assume that Oceania will have to push a bit harder to clear their FCMP inventories before the end of the season. Latin American market sentiment is stable due to most of the volumes of the low season already being negotiated. Prices remain at USD 4200 FOB levels, despite resistance from buyers in Brazil.
Asia-Pacific
Oceania prices fluctuated since mid-February
The market was quite volatile in the past few weeks because of uncertainties and sentiment, despite stable fundamentals. Futures prices dropped and then rose again as an indicator of the market looking for a clear direction but, in the end, last week’s GDT price settled around USD 4000 FOB. The Middle East has been the major buyer of Oceania FCMP recently. China turned out to be mainly interested, outside of GDT, in securing volumes for Q4 delivery. Going forward the volumes on offer at GDT will decline, in line with the winding down of the Oceania season but this year they are being announced to shrink faster than usual, allegedly because of the current dry circumstances particularly at the Northern Island.
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