The global skim milk powder market has shifted significantly from what was expected at the start of 2026. Rather than a supply-heavy, export-dependent picture, the market has turned decidedly firm, and that tone is expected to persist for the foreseeable future.
The key driver is the United States. US NFDM production has been running at multi-year lows, as processors have redirected capacity toward higher-value products including cheese, fresh milk, and protein concentrates. January NFDM/SMP production came in below year-ago levels, and stocks have barely moved. With the US sidelined as a reliable exporter, international buyers have turned to other origins. European SMP has become the cheapest origin globally as a result.
That export pull is keeping the European market tighter than domestic production volumes alone would suggest. EU drying capacity is now running at full utilisation, and there is no spare capacity to absorb additional volume even with skim milk concentrate available at low prices. The Oceanian season is winding down, reducing global availability further. The latest GDT Pulse auction confirmed a nearly $300/mt premium for New Zealand SMP over European origins.
Geopolitical uncertainty in the Middle East has added urgency to an already firm market, with risk-buying from major importers pulling demand forward. This is likely to keep prices elevated throughout the remainder of the year.
There are nuances to watch. Demand pulled forward now is demand that will not need to be purchased later, which could create a softer period in H2 once covered buyers step back. Whether scheduled shipments to the Middle East proceed as planned also remains to be seen. For now, the market is firmly in bull mode, and a return to the weak, oversupplied conditions originally anticipated looks unlikely.
Read the full SMP market analysis in Vesper’s Free Dairy H1 2026 Market Outlook: https://vespertool.com/downloads/butt
