SMP Sales Nearly Double to Southeast Asia
October 13, 2020
Combined U.S. exports of skim milk powder (SMP) and nonfat dry milk (NDM) of more than 480 million pounds to the Philippines, Indonesia, Malaysia, and Vietnam are up an enormous 72% for January through August, compared to the same period in 2019. Sales through August have already surpassed 2019’s total U.S. SMP exports to these nations. After Mexico, these four countries rank second through fifth as the biggest customers for U.S. SMP exports. While in 2019 this group imported approximately 320 million pounds less U.S. SMP than Mexico, through August, they have imported almost 70 million more pounds of U.S. milk powder than Mexico.
For the first half of 2020, the Philippines imported 5% less NDM and SMP when compared to first-half 2019, even though imports from the United States were up significantly. At the same time, imports from Europe were down sharply. In Indonesia and Malaysia, first-half 2020 SMP imports totaled over 380 million pounds and increased 8% annually. Again, the United States saw huge year-over-year gains, as European nations lost share.
SMP demand from other key global buyers, Mexico and China, has been weaker in 2020 compared to 2019. Mexican imports of SMP from January to July were nearly 77 million less pounds than last year and the lowest since 2016. This weaker demand was likely due to increased Mexican milk production and lost demand because of Covid-19. Year to date through August, Chinese SMP imports were down 55 million pounds from 2019, but last year was a record year for SMP imports, and 2020 is on track to be the second-highest year ever.
Resilient purchases from Southeast Asia and China have helped to foster the recovery in milk powder prices so far. Despite Covid-19 concerns, stocks are not heavy, and prices have recovered from this spring’s lows. More demand, from countries like Mexico, is needed for the market to climb further.