SMP/NFDM
Alternative outlets for milk protein impair milk powder supply
Europe
Tight supply services strong demand
The EU market for SMP is tight, particularly for nearby. Sellers increase their prices weekly and there is abundant demand from several sides. Multinational buyers are sometimes asking for advanced delivery and there are some large tenders in Asia and the Middle East. However, at the current high prices most of the buyers are not willing to buy forward but instead focus on nearby deals. The sell side generally feels relaxed and can afford to lean back. The spot price is around EUR 3500-3600 ex works, with second and third tier product at the bottom end of this range. Premium powder sells even above the top end. International competitiveness of EU powder has improved with the recent depreciation of the US dollar versus the euro.
Americas
NFDM price appreciates quickly
We have written this several times already but the good milk production does not lead to strong availability of NFDM. US stocks are now reportedly near a 10-year low level. Mexico stepped in to cover demand for October and November. Spot availability is very limited and offers are priced at a massive premium over futures levels. The spot price right now is USD 2.25-2.26/lb (4975/t) ex works and is again approaching the record price level that was reached in May this year of USD 2.28/lb. At the moment there is no doubt that the current price will surpass this level quite soon even, as the global sentiment is now bullish as well – which was not yet the case in May this year. US NFDM currently is not competitive on the world market, but in Q1 this may be different when we take a look at the futures prices in the EU and the US.
Asia-Pacific
Dairy protein demand dictates SMP price
The SMP price in the APAC region continues to receive tailwind from the global protein boom. Particularly in the EU and the US, but also in the Middle East and to a lesser extent APAC, the demand for protein enriched food pulls a significant part of milk to WPC and MPC manufacturing facilities. This subdues the availability of SMP for export destinations whilst demand for milk powder remains unchanged, with an obvious upward effect on prices. Post GDT the SMP price in APAC has risen to USD 4100-4200 FOB. This means it could be on the way to the record levels we quoted in Q1 and Q2 of 2022. The fact that the price rises at a time that the Southern hemisphere supply is about to peak seasonally only further underlines the magnitude of shift in the global dairy protein consumption pattern.
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