India’s cow milk production/ consumption will remain at 7600 metric tonnes in the calendar year 2018 which is expected to remain better than 7200 tonnes of the total in the CY 2017. Though, India’s main dependency on milk & especially skimmed milked powder remain in less vulnerable condition, due to better output from various regions.
Skimmed Milk Powder (SMP) Exports from the European Union are booming and are globally projected to reach a record 759,000 tons for the year – a near one-third increase in volume over 2016. While 20 per cent of the shipped amount this year has been destined to North African and Middle Eastern markets such as Algeria, Egypt, and Saudi Arabia, a significant portion has been flowing to Mexico and Asian markets like India. As a result, U.S. exports of SMP have faced strong market competition and erosion of market share. For Mexico, EU shipments of SMP through September total 37,000 tons or over 4 times the volume exported in 2016 for the comparable period.
In 2018, EU shipments of SMP are forecast to continue growing at a more moderate pace to reach 780,000 tons – up three per cent from 2017. Despite this growth, the European Union is expected to carry-over substantial intervention stocks which will continue to weigh on global SMP markets. At the end of October, intervention stocks totalled 376,000 tons plus there was an additional 6,000 tons in the Private Storage Aid scheme.
Due to the high volumes of intervention, the EU Commission is considering implementing a tendering process that would give the Commission the flexibility of controlling the flow of surplus SMP into intervention. No assumption is made concerning a change in policy and until the EU can resolve the issue of these stocks, the prospect for any price recovery of SMP will be dim.
The Canadian SMP
In Canada, exports of SMP have accelerated to reach 61,000 tons by October, a growth rate of 214 per cent year-over-year. Consequently, the 2017 export forecast is revised up by nearly 70 percent to 75,000 tons. Most of the SMP has so far been shipped to Mexico and the EU dominant markets of Egypt and Algeria. For 2018, the Canadian Dairy Corporation (CDC) will likely raise milk production quota limits to satisfy the strong domestic demand for milk-fat. Increased domestic production would likely limit imports of butter and cream from the United States and New Zealand. This action is expected to raise SMP production and exports are forecast to grow by 13 per cent to 85,000 tons.