On Wednesday 8th March, the Soummam tender for a total of 12,5k mt Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP), with delivery starting in April, closed. According to multiple market sources, several traders and processors from the EU and New Zealand competed heavily for the tender, as Chinese demand remains limited. Sellers looked to commit volumes if possible. Several market sources have indicated that SMP volumes have been largely covered by EU suppliers, while WMP volumes have been split between EU and New Zealand suppliers. Closing prices for the tender have been reported around €2,500/mt CFR Algeria for SMP, while prices for WMP have been reported around €3,400/mt CFR.
While the demand side remains uncertain, strong supply continues, with slightly increased production, according to multiple market sources. Rising milk intakes and higher-than-expected milk solids are supporting production. While producers have commented that stock levels are growing, storage capacity is still available. Traders painted a slightly different picture, with several indicating that even though storage capacity is still available, it is lower than usual for this time of the year, and concerns are growing that volume needs to be moved before the flush, to generate more space.
One source commented, “there are so many unknown factors in the market currently. We have a slightly bearish view, but there are arguments for slightly bullish sentiment. We simply need to wait until we know how strong the milk flush volumes are.”
For reference, the MBP for Spot Skimmed Milk Powder EXW Europe [Mintec Code: J117] was assessed at €2,575/mt on 9th March, down 3% on the week. Meanwhile, the MBP for Spot Whole Milk Powder EXW Europe [Mintec Code: J118] was last assessed on 9th March at €3,450/mt, unchanged week-on-week.