SMP

The EU has become the most competitive originPrices in the three main export origins are aligning

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Europe

Price in euro stable in past three months

In the past month supply of liquids suffered a little from dry weather which drove the concentrate prices upwards. In the first week of June demand for SMP is relatively quiet, both inside the EU and on the export markets, with holidays in the Middle East. Exchange rate fluctuations dictate product competitiveness in export markets, which makes things unpredictable. As a result the sell side is ready for business but the buyside can afford to wait. Most export business continues to be covered by Oceania. In Euro terms the EU price has not changed in the past three months at the average level of EUR 2425 ex works. The upward move in the graph is solely an exchange rate effect.

Americas

Market feels stable for nearby, but concerns rise over the remainder of the year

The US market is stable due to resilient demand from Mexico while availability in the main milk powder producing states is OK at best. Some concern is building for Q3 and Q4. The US needs exports to balance its own market, but prices in the rest of the world are moving lower. Manufacturers are still comfortable for the next couple of months though because stocks are low and Mexican demand proved resilient while prices have moved up to USD 1.29-1.30/lb (2845-2865/t) ex works. Medium heat powder remains at a discount of USD 2-3cts/lb.

Asia-Pacific

Price drops to EU and US level

From a price perspective at least the APAC market can source in all three main origins, as all prices are aligning. Much depends though on the euro-dollar exchange rate, since currency volatility opens and closes doors for EU origins with daily intervals. Freight rates from EU to APAC are relatively low though at the moment which supports EU origins. The Oceanian supply side is already beginning to prepare for the next season, and it is expected that the ongoing high valorization of butter will trigger increased production of SMP in a few month’s time. Chinese demand for SMP, both right now and in H2, is a big question mark. The average price for spot SMP at the moment is USD 2850-2900 CIF Asia.

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