Dairy commodity prices in 2020 did not find much stability over an extended period and kept buyers pondering the best time to purchase. In hindsight, we can say that from the buyers perspective, the best decisions for SMP purchases from Europe were taken in April, post which the price tide reversed and continued to move up.
While prices saw a very sharp decline in a short span at the start of the pandemic in end Q1 / early Q2 2020, we saw the prices surge back up after the steep fall until the year end. The average prices for 2020 however were lower than those in January 2020 for these products.
The reasons that can be cited for the increase include: No intervention stocks in Europe, strengthening of Euro against USD, increased demands of certain products from Europe due to non-availability from Oceania and an increased demand from large economies like China, as they opened again for imports.
SMP: For the period Jan-Nov 2020, the EU 28 saw an increase of approx. 41,000 MT over LY for the same period for 2019. The EU 28 produced over 1,414k MT of SMP in the first eleven months of 2020 as compared to 1,373k MT for the same period of 2019.For the period Jan-Nov 2020, Germany emerged as the largest producer out of Europe with 377k MT followed by France with 370k MT and Poland a distant third with 151k MT. These three countries contribute to app. 63.5% of the total SMP produced in EU – 28 for the period of Jan-Nov (total production being 1,414k MT). Germany, Ireland and Netherlands saw an increase in their production over 2019 with a positive contribution if 15,500; 14,500 and 4,000 MT respectively. France and Denmark on the other hand saw a drop of 8,800 MT and 4,000 MT respectively as against 2019 volumes of SMP produced.
SMP prices from Germany averaged out to 2,241 Euro / MT FOB for the year 2020. This is higher than the average price of 2,154 Euro / MT FOB for the year 2019. After starting at levels of 2,625 Euro in Jan 2020, the prices saw a steep decline with the lowest price of 1,980 Euro / MT recorded in April, 2020. After this the prices saw a continuous increase and the trend continues into 2021 with prices averaging at 2,350 Euro / MT FOB as of mid-Feb 2021.