The SMP market sentiment was reported mixed during this week’s assessment period (1st June 2023 16:00 BST – 8th June 2023 15:59:59 BST); while prices remained stable during the first half of the assessment period, prices started to decline during the second half of the week. Lacklustre demand (domestic and international), in combination with ample supply and high stocks, weighed on prices during the second half. Buying interest from major food manufacturers has been reportedly sluggish lately, as consumer demand expectations remain low for H2 2023. The combination of ample supply and weak demand is anticipated to result in a price correction during the coming 2-3 weeks. One market source commented, “one of the big food manufacturers is still sourcing many volumes. This is concerning, and it shows how weak the demand is across the EU market.” A trader commented, “besides weak EU demand, international demand also remains limited. We are not expecting to see large North African tenders returning to the market before late July or early August. That weak international demand is expected to weigh further on prices during June”. For reference, the MBP for Skimmed Milk Powder EXW Europe [Mintec Code: J117] was assessed at €2,450/mt on 8th June, down 2% on the week.
The market sentiment for EU unsalted butter turned neutral during the week, with prices across the EU trading at comparable price levels to the week prior. Higher butter stocks, in combination with weak spot demand across the EU, led to weaker market sentiment for the coming two weeks. Further, high storage costs continue to weigh on butter prices as finance costs become increasingly challenging for producers. Large end-users continue to stagger their purchases, moving from longer contracts to ‘hand-to-mouth’ purchases. A processor stated, “our short-term sentiment is bearish; we are simply not seeing enough demand in the market while supply is ample. We had to sell some product this week as our storage capacities are running short, which could weigh further on prices. However, our Q3 sentiment remains bullish.” One buyer commented, “we are currently negotiating Q3 contracts; however, the process is a lot slower than in the past years. While supply was the big topic last year, demand is the big story this year. With low consumer demand expectations, we are trying to cover only our needs without building too many security stocks.” The assessment for Unsalted Butter EXW European Union [Mintec Code: J116] was made at €4,650/mt, up €25/mt w-o-w.
