With prices recently declining in all major markets (the EU, New Zealand, and South America), multiple market sources indicated that the market could see new dairy tenders in the coming weeks. However, according to multiple market sources, the import derogations are still not finalised, which is delaying the process currently; without the derogation, Algeria’s market players are not able to issue any tenders.
Multiple market sources agreed during the week that a new tender will likely be towards the end of July or early August, depending on how long the downward trend on the international SMP markets continues. However, it remains uncertain how much a new milk powder tender would impact European SMP prices, as uncertainty surrounding the halal certification remains. Further, the supply side continues to outweigh the demand notably in the current spot market; it remains to be seen if the tender size would change this, which seems unlikely according to market sources.
While more indications surrounding a potential new tender are reported in the market, uncertainty surrounding the required halal certification remains. Following the implementation of a halal certification early this year for EU exports, it remains uncertain how the certification process will be handled. According to the latest market reports, EU processors need to sign a contract with the Great Mosque of Paris to ensure a flawless process.
One processor commented, “the issue with the certification is that there is still so much uncertainty; the latest information we got is that we potentially need to sign a contract with the Great Mosque of Paris. This whole process adds a lot of uncertainty to the market. We are not sure if we are going to participate in any tender if issued.”
A trader commented, “while it is pretty clear that processors can sign a contract with the Great Mosque of Paris to get the needed certification, we are still not sure how this process will work for traders. If the current situation remains, we are not sure if we can offer at any tenders issued from Algeria.”
Further, EU market players have stated their concerns as halal certification is only required from EU suppliers. Producers from New Zealand or South America are not required to provide the same documentation.
Mintec will monitor this situation closely and publish further updates during the coming weeks.