EU SMP stocks ease but rebuild still possible

Published 8 June 15

Excessive skimmed milk powder (SMP) stocks in the EU have reportedly eased due to good export performance and falling milk production in the first quarter of the year.

However there are concerns that Algeria, the biggest importer of EU SMP last year, could purchase significantly less powder from the EU over the course of 2015. This is off the back of reports by NZX Agri that a significant portion of Algeria’s latest SMP tender has been awarded to NZ processor Fonterra. It appears Fonterra’s product was more competitively priced at $2,150/tonne, which was $100/tonne lower than the price agreed for EU SMP.

If exports to Algeria do fall and alternative markets prove difficult to find then EU SMP stocks could start to build again, potentially adding downward pressure to prices.