Following the lift of the Halal Certification requirement for EU milk powders by the Algerian government during the week prior, on Monday 31st July, the Algerian buying agency ONIL (Office National Interprofessionnel du Lait et de Produits Laitiers) issued a new tender for Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP) for delivery in Q4. The tender closed during the second half of week 31. While market sources hoped that the tender would indicate a clearer direction as to where the global milk powder market will move following reduced market activity seen over June and July, uncertainty remains following the tender.
According to multiple market sources, the tender closed at price levels of $2,700-2,750/mt CFR Algeria for SMP, and $3,100/mt CFR Algeria for WMP, with SMP volumes largely supplied out of Europe and WMP volumes primarily supplied from New Zealand, though a small volume is also reported to be supplied from South America.
Following the announcement of the tender, market sources across the dairy market expected closing prices of $200/mt or higher than the actual confirmed price levels. With the tender closing on lower-than-expected price levels, questions have again arisen about what direction the milk powder market will take over the coming month.
One source stated, “We have plenty of powder stocks in Europe, and the southern hemisphere is now moving into their flush season. I am hearing reports that there are still older stocks in New Zealand as Chinese demand was weaker than expected thought the year. This stock needs to be cleared before new products come in which will weigh on global prices. Also, with reduced Chinese demand for WMP, we expect to see more SMP and butter production in NZ this year.”
A second source commented, “While supply is good, producers are in no rush to sell. Supply of liquids is a strong concern during Q4 2023 and Q1 2024. We don’t expect producers to sell off powders now with the uncertain availability of fresh supply later this milk season. Further, several key buyers in the European market have not covered their demand for Q4 and Q1 yet, indicating that there is still some major buying to do within the EU marketplace.”
Mintec will monitor this situation closely and publish further updates during the coming weeks.
