FCMP

Tight supply keeps prices elevated

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Europe

Stuck on high levels

Even though the butter prices in the EU have declined marginally EU producers feel very little interest to produce FCMP. Valorization-wise a price of EUR 4150 would make sense but there is no product available below EUR 4350 ex works, as processors rather save their milk fats for alternative uses. Most of the large EU buyers have covered their Q2 requirements already, so the quoted price is for those – mainly smaller – buyers that are in need of product with some urgency.

Americas

Buyside resistance to current price level

The Latin American FCMP market is super tight. Suppliers are relaxed and many of them are actually sold out until June or even later. This has pulled the market price up a little to USD 4200-4300 FOB, but even though the demand side is across the board largely uncovered there is resistance at these prices. Fundamentally, it feels like the market is about to get squeezed as there is simply not enough supply available to push the price down. Most sellers are booked well into Q3 and the availability in New Zealand also appears to be limited. It remains to be seen how long the buyside can afford to wait for prices to come their way, or that there will appear additional proof that the price level has transitioned to a higher range altogether.

Asia-Pacific

Downward pressure largely absent

The FCMP market has not seen downward price potential these last few weeks. Suppliers remain relaxed, because of limited availability in the off season, particularly with the dry weather on the Northern Island of New Zealand, and the volumes on GDT are at the lowest levels. This makes it hard for buyers to find supply. Chinese buying appetite focuses on Q3 mainly and SE Asia and the Middle East have also been a little absent, likely because of the post-Ramadan holidays. At the current – historically quite high, see box below – price level of USD 4125 FOB several parties are hesitant to do business. Local traders in China, for instance, temporarily abstain from taking positions. However, with the EU having no supply at all and the Latin American market being super tight there are really not many alternatives to Oceania powder.

Nice to know

There is some buyer resistance at the current price level, which is well above the USD 4000 mark. Such a high price level has not occurred very often as the graph below illustrates. Outliers are Q2 in 2021 and H1 in 2022 when the aftermath of COVID disrupted supply chains.