No SMP sold in latest EU tender – what’s the impact?

Published 20 January 17

The latest (third) tender process for the sale of SMP sitting in intervention saw bids for nearly 7.5k tonnes of product but nothing sold. So far, the EU Commission has seen just 40 tonnes leave storage, after the first tender in late December.

The highest price offered was €1,900/tonne, €210 below the average price for EU SMP – as reported by the Milk Market Observatory for 15 Jan.

Buyers have shown a resistance to purchasing stock above market price, which is what the Commission is looking to achieve. However, with the EU flush not all that far away, selling product from intervention may become trickier. Buyers are likely to wait for clearer market signals around production before any significant commitment to the market. A low flush could see buyers increase their offer prices, allowing the Commission to achieve its goal. However, a normal/high flush could alter the supply/demand balance and limit the opportunities for the Commission to sell at full market price. Whether the Commission then needs to reset its price aspirations will depend much on the longevity of product in storage.