Futures markets under pressure for SMP while butter is uncertain

Published 14 April 17

EU SMP prices continued to fall in March as prices headed towards the intervention level. Butter prices saw some stability in March, however, the average March price was slightly less than February.

A similar picture was seen in the futures markets, with SMP falling while butter jumped around week-on-week, which highlights some uncertainty for future market movements.

The impact of these movements resulted in the Forward Market Performance (FMP*) indicator remaining negative but only marginally, with the FMPE Jul-17 price 1% ahead of the EU AMPE Mar-17 price.

 FMP table

Source: AHDB Dairy

The small FMP figure shows there is some level of stability, but uncertainty in the combined returns for SMP and butter, for EU AMPE and FMPE. However, the prospects over the coming months for the individual products are rather different, with SMP weakening and butter strengthening.


*FMP is the relationship between an AMPE figure, based on current EU wholesale prices, and a FMPE (Future Milk Price Equivalent) figure, based on futures prices. It assess the buying of those involved in the futures markets to see the potential supply/demand relationship in the coming months. Therefore, a negative figure indicates that those involved in the futures market during that month feel there could be relatively high supply and the market will become supply focused in the coming months. A positive figure means those trading futures believe supply will become tight, pushing demand and causing the market to become demand focused.

For more information on FMP, please click here.