EU skimmed milk powder tender move boosts dairy outlook
Tender offers for Skimmed Milk Powder (SMP) have been accepted by the European Commission.
The move is said to be a significant sign the dairy market is recovering despite the volumes accepted being small at 100t.
In terms of price it is understood a bid of €1,850/t from Belgium was accepted which is just over 6pc back from current market prices, but the product sold has an age profile of 18 months plus.
Sources in Brussels suggest the tender split countries on whether to accept it or not, with 21 member states for, five against and two abstentions.
The move is significant as for the first time in 2017 it reveals a baseline price that the EU will accept to start shifting the circa 350,000t of SMP they have in intervention stock across Europe.
The overhang of SMP from 2015-16 represents approximately 17pc of annual SMP trade and is 1.6pc of annual EU milk production.
Commentators have highlighted that should the sale go through it would put an estimated value on this stock of around €650 million that all traders across the world know that is there.
Agriculture and Rural Development Commissioner Phil Hogan told Agriculture MEPs skimmed milk powder remains an issue and added that it is being used by some people in the trade in order to "talk down prices in the market place".