The three main skimmed milk powder (SMP) producers (the USA, European Union and New Zealand) experienced an upward price trend over the last three months (Mar-May 2021). From the demand side, this is mainly attributed to the uptick in the foodservice sector driven by the progress of vaccinations rollout across the globe and the progressive lifting of social and travel restrictions. Also, this upward price trend was supported by weak milk supplies in Europe and the end of the New Zealand milk session collection on 31st May.
In Europe, the unusually cold spring has adversely affected pasture growth and the availability of fresh feed for cows. This has led to a slow start for the 2021 EU milk production in Q1 2021, which translated to a decline in SMP production, down 6.1% year-on-year, according to Eurostat. Thus, the average Mintec price in the Mar-May 2021 period of European SMP increased by 12% quarter-on-quarter to EUR 2,544/MT.
Europe is the largest SMP producer, and this drop in supply and subsequent price rise during the spring flush has had an impact on global prices. Despite the USA having a production growth of non-fat dried milk and SMP, the average Mintec price in the Mar-May 2021 period reached USD 2,813/MT, up 9% quarter-on-quarter. A similar upward price trend occurred in New Zealand, where traders and companies rushed to secure supplies in anticipation of tightening availability by the end of milk collection season. The average price in the Mar-May 2021 period of New Zealand SMP stood at NZD 4,803/MT, up 13% quarter-on-quarter.