Competitive SMP market could delay price recovery

Published 15 June 15

An increase in the level of competition for trading SMP, particularly to SE Asia, could delay price recovery. Anecdotal commentary suggests both Oceania and the EU have increased SMP production over recent months. Oceania has funnelled milk away from WMP and into SMP/butter for better returns while the Russian ban has seen the EU channel milk away from cheese production. This increase in SMP production has led to more exportable product with Australia SMP exports up circa 30% (Jan-Apr) while EU exports are up nearly 20% (Jan-Mar), compared to the previous year. However, as the market is currently suited for buyers, it is likely competition to secure trade will remain fierce. As long as the balance remains in favour of buyers, then pressure is likely to remain on wholesale SMP prices.