European and New Zealand SMP prices climbed again this week, with the latest GDT auction confirming the move. NZ SMP surpassed $3600/mt at the event, and European SMP firmed for another consecutive week. US NFDM continues to print new highs on the CME spot call.

The shift is being driven by the persistent US shortage. Since the start of the year, US markets have pulled global milk powder prices higher and remain firm enough to push global SMP toward $3500/mt and above. Coming off a long period of oversupply, US producers are still playing catch-up on NFDM production. Some are even considering importing SMP into the US or LATAM to fulfil orders they cannot meet themselves.

That additional demand is finding its way into European and NZ SMP markets, both of which are seeing prices firm on strong export demand.

Mixed signals from the broader complex

This week sat between competing forces. Milk is available in high volumes, butter is under pressure, and SMP has been in high demand for as long as the US remains short. The GDT confirmed the broad picture, but there was room for interpretation: a high basis between futures and physical, new highs for NFDM, seasonally lower milk production in France, and rising prices for cream and skimmed milk concentrate. Trade activity picked up enough to lift the bottom of the European butter price range and the top of the SMP range.

Butter weakens despite cream support

European butter prices have drifted lower over recent weeks, with little spot demand and slightly more spot pressure weighing on the market. Stocks have been growing for several months and are expected to keep growing into the start of H2. Futures have been trading well above physical forward prices for Q2 and Q3, which prompted a slight rebound this week, particularly at the bottom of the physical market. EU butter remains relatively cheap in a historical context, which has triggered buyers to lock in volumes for 2026 and even 2027.

US butter has also weakened, with the latest cold storage report showing stock build through February running above seasonal norms. Milk and milkfat production are at multi-year highs, keeping butter churns running at maximum capacity. New Zealand production has been solid, but buyers continue to pay a premium for butter and AMF, reflecting a persistent preference for origin.

WMP caught between forces

European WMP is unlikely to move dramatically in the near term. Fat prices are soft, pulling valuations lower, while milk protein markets are firm and pulling in the opposite direction. Strong milk production has encouraged some cooperatives to push additional WMP into the spot market, keeping availability slightly elevated. EU WMP is currently trading at roughly a 10% premium to SMP.

Oceanian WMP feels firmer. Southeast Asian demand came in strong during this week’s GDT event for the relatively low volumes on offer. Chinese WMP markets remain a watch point, with rising stock levels as imports run high and consumption falls. March imports came in strong again, and at the current rate, Chinese stocks could weigh on NZ WMP demand later this year.

Outlook

US milk powder markets are widely expected to break, but it will take a strong push in supply before they can move back down. Until then, EU and NZ SMP markets are being held up by exports and should feel heavier once those fade. Butter stocks are expected to keep building toward a peak in June or July, which should keep European and US butter prices low and put a ceiling on NZ milkfat. All eyes remain on the US, and whether upcoming production numbers will reveal a growing surplus.