Following last week’s milk powder tender by the Algerian buying agency, Office National Interprofessional du Lait et des Produits Laitiers (ONIL), for 80k metric tonnes (mt) divided into Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP), market activity was reported limited in the first half of the week.
However, on 2nd March, Soummam (Algeria’s largest private buyer) returned to the market with a milk powder tender for a combined 12.5k mt, also looking for SMP and WMP. The tender will close on 8th March, and delivery is expected to start from April onwards. The return of Soummam to the market caught many market participants off guard, taking into consideration that Soummam closed a 12,5k mt tender for Q2 2023 in the last week of January and ONIL just closed its tender the last week.
While WMP volumes are usually covered by New Zealand producers, market sources indicated that activity on the Soummam tender might be reduced following large milk powder volumes that have been sold in the ONIL tender the previous week, potentially supporting market activity from EU market sources for both SMP and WMP.
How much this tender will influence buying behaviour of other companies remains uncertain. The market sentiment for March was reported mixed throughout the week, and uncertainty is even greater following the tender. While some market participants anticipate more buying interest returning to the market, other market sources expect to see increasing supply and weaker demand leading to the downward potential of milk powder prices in March.