There is growing expectation that the European Commission’s intervention stocks of skimmed milk powder (SMP) will be cleared by next May.

Last week, the European Commission sold a further 26,000t of SMP out of intervention, with the minimum selling price rising above €1,310/t.

The European Commission has now sold over 225,000t of SMP out of intervention since the sales began, which leaves a further 165,000t yet to be sold. Almost 60% of intervention SMP stocks have now been sold.

The continued strong sales volumes of intervention SMP over recent months, coupled with rising minimum sales prices, indicate a shift in sentiment in SMP markets. The improving outlook for SMP is expected to carry into 2019 and will help drive demand for the remaining stocks of intervention SMP until they are cleared.

A clearout of the European Commission’s SMP stockpile would certainly help boost dairy markets in 2019 and could help maintain farmgate milk prices next year. The intervention stocks have acted like a drag weight on global dairy markets for the past two years, particularly for milk powder.In the last month, European spot prices for freshly produced SMP have lifted above the intervention price of €1,698/t for the first time in over a year.