Dairy
Global Skim Milk Powder (SMP) Market Experiences Varied Trends in 2024
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 mainly due to an overall increase in milk production and the need to manage larger volumes during peak periods.
The rise in milk availability has also led to higher production of both SMP and butter, with Australian SMP exports projected to grow by 20% to 160,000 tons. The primary markets for Australian SMP are China and Indonesia, but there has been a notable shift in trade dynamics. Reduced exports to China are being offset by increased demand from other Asian countries like Vietnam, Thailand, Malaysia, and Saudi Arabia.
In contrast, the European Union is experiencing a slight decline in SMP production as dairy processors shift their focus to more profitable cheese production. This shift is driven by lower farm-gate milk prices and higher production costs, making SMP production less profitable. Consequently, EU SMP exports are expected to decrease. The EU faces increased global competition and changing market dynamics, with traditional markets like the Middle East, North Africa, and Southeast Asia boosting local production and turning to other exporters such as New Zealand and Australia.
The United States is also encountering challenges in the SMP sector, with exports down by 11% through May 2024. Overall, U.S. SMP exports are expected to decline by more than 8% to 741,000 tons by the end of the year. This decrease is driven by weak demand from key Southeast Asian markets and a strong U.S. dollar, making U.S. products less price-competitive. Although global economic conditions show signs of stabilizing, which could potentially improve U.S. export performance, the competitive edge has shifted to other major exporters like New Zealand. New Zealand’s favorable production conditions and the strength of the U.S. dollar have enabled it to capture a larger market share.
While U.S. SMP prices may become more competitive in the latter half of 2024, they are unlikely to recover the losses experienced earlier in the year, as Oceania prices are expected 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.