Dairy Commodities Market Intelligence

The Dairy commodities market has been as full of surprises as this year has and has kept buyers on their toes. While prices saw a very sharp decline in a short span towards the end of Q1 as a global pandemic swept the planet, creating uncertainty and fear. But then we saw prices surge in Q2 and Q3 due to no intervention stocks in Europe, the strengthening of Euro against USD, increased demands of certain products from Europe due to non-availability from Oceania and an increase in demand from large economies like China as they opened again for imports by early Q3.

SMP: For the period Jan-Sep 2020, EU–28 saw an increase of approx. 35,450 MT over LY for the same period for 2019. EU-28 produced over 1200k MT of SMP in the first nine months of 2020 with each month’s production higher than the respective month of last year. May 2020 still holds the record for highest production recorded in 2020 with 155k MT.

For the period Jan-Sep 2020, France maintained its leading position with 320k MT followed by Germany with 314k MT and Poland a distant third with 133k MT. The three countries contribute to approx. 64% of the total SMP produced in EU–28 for the period of Jan-Sep (total production being 1201k MT).

The average price of SMP from Germany as of mid Nov stands at 2,180 Euro/MT FOB as against 2,030 Euro/MT FOB from US and 2,350 Euro/MT FOB from Oceania.

SMP from Germany saw a price increase in the months of Sep and Oct,
but dropped back down again in Nov to an average of 2,180 Euro/MT FOB by Mid November, 2020 as against an average price of 2,195 Euro/MT FOB in September; 2,453 Euro/MT FOB in June and an average price of 2,640 Euro/MT FOB in March 2020.

SMP from Oceania recorded an average price of 2,351 Euro/MT FOB in November; as against 2,407 Euro/MT FOB in September; 2,262 Euro/MT FOB in June 2020 and an average of 2,487 Euro/ MT FOB in March 2020.

SMP prices from the USA had an average of 2030 Euro/MT FOB in November against an average of 1,920 Euro/MT FOB in September; 1,975 Euro/MT FOB in June and 2,200 Euro/MT FOB in March 2020. It recorded a low of 1,800 Euro/MT FOB in April 2020.

Non availability of SMP HHHS from Fonterra has led to a shift to European suppliers at a premium which has also been a reason for higher average prices for SMP from Europe, who can produce SMP HHHS.

WMP: The production of WMP in Europe showed an increase over last year in the first nine months of 2020. For the period of Jan-Sep 2020, EU-28 produced approx. 624k MT of WMP as against 603k MT for the same period LY.

The YTD November price for WMP for the year 2020 average to 2,820 Euro/MT FOB from Germany, 2,600 Euro/MT FOB from Oceania and 3,328 Euro/MT FOB from USA.

Germany, the largest contributor LY with app. 36% of total EU WMP production, continued to lead from the front with a contribution of approx. 214k MT of WMP for the period of Jan-Sep 2020.

Netherlands continues to be the second largest producer of WMP from EU-28 this year too, with a contribution of 136k MT followed by France with a 99k MT production of WMP for the period of Jan-Sep 2020.

The German WMP was exported at an average price of 2,758 Euro/MT FOB in November as against 2,800 Euro/MT FOB in September 2020; approx. 2,693 Euro/MT FOB in June 2020 and 2,970 Euro/MT FOB in March 2020. The lowest price for WMP from Germany for this year were recorded in the month of May with an average of 2,615 Euro/MT FOB.

WMP prices from Oceania averaged at 2,531 Euro/ MT in November as against 2,518 Euro/MT FOB in September; 2,540 Euro/MT FOB average in June and an average of 2,610 Euro/MT FOB in March 2020. The lowest price for WMP from Oceania for this year were recorded in the month of May with an average of 2,477 Euro/MT FOB.

WMP prices from US averaged at 3,030 Euro/MT FOB in November as against 3,160 Euro/MT FOB in September. The lowest price for WMP from US for this year recorded in the month of August at an average of 3,108 Euro/MT FOB.