Global Skim Milk Powder (SMP) Market Sees Divergent Trends in 2024
Source: The DairyNews
In 2024, Australia's skim milk powder (SMP) production is projected to rise significantly, marking a 17% increase to reach 170,000 tons.
This growth is primarily attributed to an overall boost in milk production and the need to manage larger volumes during peak periods. The increase in milk availability has also necessitated higher output for both SMP and butter, with Australian SMP exports expected to grow by 20% to 160,000 tons. The main markets for Australian SMP include China and Indonesia, though there has been a notable shift in trade dynamics, with reduced exports to China being compensated by increased demand from other Asian countries like Vietnam, Thailand, Malaysia, and Saudi Arabia.
Conversely, the European Union is experiencing a slight decline in SMP production as dairy processors shift their focus towards more lucrative cheese production, influenced by lower farm-gate milk prices and higher production costs. This shift has rendered SMP production less profitable, leading to a forecasted decrease in EU SMP exports. The EU faces heightened global competition and shifting market dynamics, with traditional markets like the Middle East, North Africa, and Southeast Asia increasing local production and turning to other exporters such as New Zealand and Australia.
The United States is also seeing challenges in the SMP sector, with exports down by 11% through May 2024.
Overall, U.S. SMP exports are expected to decrease by more than 8% to 741,000 tons by year's end. The decline has been driven by weak demand from key Southeast Asian markets and a strong U.S. dollar, which has made U.S. products less price-competitive. Although global economic conditions show signs of stabilizing, which could potentially boost U.S. export performance, the competitive edge has shifted towards other major exporters like New Zealand. New Zealand's favorable production conditions and the strength of the U.S. dollar have allowed it to capture a larger market share.
Although U.S. SMP prices may improve in competitiveness in the latter half of 2024, they are unlikely to recover the losses experienced earlier in the year, as Oceania prices are forecast to remain closely competitive.
This divergent trend in the global SMP market highlights the dynamic nature of international dairy trade and underscores the impact of economic, environmental, and competitive factors on global dairy exports.
Conversely, the European Union is experiencing a slight decline in SMP production as dairy processors shift their focus towards more lucrative cheese production, influenced by lower farm-gate milk prices and higher production costs. This shift has rendered SMP production less profitable, leading to a forecasted decrease in EU SMP exports. The EU faces heightened global competition and shifting market dynamics, with traditional markets like the Middle East, North Africa, and Southeast Asia increasing local production and turning to other exporters such as New Zealand and Australia.
The United States is also seeing challenges in the SMP sector, with exports down by 11% through May 2024.
Overall, U.S. SMP exports are expected to decrease by more than 8% to 741,000 tons by year's end. The decline has been driven by weak demand from key Southeast Asian markets and a strong U.S. dollar, which has made U.S. products less price-competitive. Although global economic conditions show signs of stabilizing, which could potentially boost U.S. export performance, the competitive edge has shifted towards other major exporters like New Zealand. New Zealand's favorable production conditions and the strength of the U.S. dollar have allowed it to capture a larger market share.
Although U.S. SMP prices may improve in competitiveness in the latter half of 2024, they are unlikely to recover the losses experienced earlier in the year, as Oceania prices are forecast to remain closely competitive.
This divergent trend in the global SMP market highlights the dynamic nature of international dairy trade and underscores the impact of economic, environmental, and competitive factors on global dairy exports.
