Aging stocks of SMP

Published 20 September 17

EU prices for skim milk powder (SMP) ranged between €1,650 and €1,815/tonne in August, but dipped below the intervention rate of €1,698/tonne in the first week of September in some markets. This is likely in response to the impending closure of the intervention programme at the end of the month. There remains over 350k tonnes of skim milk powder to be sold, despite the Commission holding 12 tenders.

Based on price developments in futures markets, it appears the market is expecting further weakening in SMP prices. While it is a pretty safe bet to assume SMP prices will weaken once intervention closes, the degree this occurs will depend on how the Commission deals with these stocks.

With only 4% of the powder in intervention stores less than 1 year old, it may be that these stocks will only be in demand in the animal feed markets. As such, the impact on the main SMP market, for human consumption, may remain limited.

2017.09.21