Can EU SMP exports continue at current levels

Published 19 June 19

Exports of SMP from Europe have been strong since September of last year, with exports in the first quarter of this year 35% higher than a year earlier. Competitive pricing on global markets, likely driven by high product availability, will have helped boost export sales. However, a tightening stock situation could push prices up later in the year.

Production of SMP in the EU28 in the 12 months to March 2019 was 4.5% lower year on year. This was likely due to low levels of milk production across the EU, which saw annual growth of only 0.2%. France and Germany, two of the main milk powder producers, have seen a drop in powder production of 7.7% and 9.8% respectively over this period.

 EU SMP exports

Exports as a percentage of production increased from 47% to 65% for the first quarter of this year. This figure has probably been bolstered by the volume of SMP moving out of intervention stores since the beginning of the year. Intervention stocks dropped from over 175,000 tonnes at the beginning of January to less than 2,800 tonnes by the end of March. These stocks may possibly have been at a discount to the prices for fresh product, which could have helped secure export orders.

Overall, the stock situation with SMP looks to be tightening, which will continue to keep upward pressure on prices. How much will depend on how well milk production recovers over the second half of the year.

 

 

 Jennie Tanner