SMP
Prices remain stable, but for how much longer?
Europe
Uncertainty appears to stall the market
The current price stability in the EU market may give the impression that there is not much happening, but actually it is uncertainty over a lot of factors that keeps the price range bound at the EUR 2400-2450 ex works level. Seasonally milk availability is improving, but the outbreak of FMD in Slovakia is triggering some fears about availability and importers are beginning to start avoiding certain EU origins. Then there is the volatility of the Euro/dollar exchange rate that influences the EU’s competitiveness on the export markets. Demand from the Middle East particularly has not resurfaced yet post Ramadan and some parties are concerned about whether it will at all. On the other hand there are quite some stocks of SMP in the EU and the Irish season appears to start off with decent production volumes. All things combined the EU market is a cocktail of bullish and bearish factors and this has prevented the price from taking direction either upward or downward.
Americas
US market is stable at the moment
In the course of March US NFDM prices steadily trended lower with better than expected milk production numbers for February, good yields per cow and higher stocks reported. As domestic demand was also sluggish and Mexican buyers decided to wait, the price dropped to USD 1.14/lb (2525/t) ex works by the end of the month. Since then the market stabilized and more recently the price recovered to USD 1.16-1.17/lb (about 2570/t). With the flush approaching there may be a little more downside pressure in the next two months. Medium Heat SMP is selling at par now, because it is competitive in the world market. However, the availability of MH powder is too low to win business in destinations like SE Asia and fresh volumes of this type of powder will probably only find their way to the market post the flush, once there is sufficient production capacity available again.
Asia-Pacific
Oceania powder continues to command a premium
The early April GDT price for SMP ended up higher than had been anticipated and this level is regarded as something of an outlier. Even though the volumes on offer were seasonally low there was record high selling appetite for EU powder on GDT, and some of that volume was also absorbed by EU buyers. Post GDT the market price appears to settle at USD 2950 FOB but at this level Oceania powder may be difficult to sell to exporters. However, several parties regard Oceania as the most reliable trading partner in the near future, helped by the fears for FMD problems in Europe and the trade disrupting measures that are being taken in the US. There is also good buying interest for beyond Q2 because the forward curve is quite flat. Overall the SMP market in APAC feels stable to firm.
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