As we turn into the final weeks of 2018, dairy markets in Europe are extremely quiet, with almost all business done for dairy buyers ahead of the critical Christmas period.

However, the European Commission continues to make steady progress in offloading its remaining stocks of skimmed milk powder (SMP) held in intervention, which should have a major impact on shaping dairy pricing into 2019.

Total volume sold

At the most recent tender sale of SMP, the European Commission sold a further 30,000t of its SMP intervention stockpile at a minimum price of €1,251/t.

This brings the total volume of SMP sold out of intervention by the European Commission since January this year to just over 190,000t, leaving a further 190,000t of SMP left to be sold.

If the European Commission can continue to work through its SMP stockpile over the coming months, it could have a major impact on the performance of global dairy markets in 2019.

The significance of a total clearance of the European Commission’s SMP stocks cannot be understated.

Having peaked at 380,000t, the SMP intervention stockpile has acted like a deadweight on global milk powder markets for the last three years. Should the European Commission continue to sell large chunks of its SMP stocks over the coming months, it has the potential to breathe new life into milk powder markets next year and see prices rise to more normal levels once again.