The gap between US and overseas milk powder prices has opened up again. CME spot nonfat dry milk is at $1.94/lb, against New Zealand GDT Contract 2 SMP at $1.66/lb, with European prices also sitting below the US. The large US premium seen earlier this year had narrowed over the summer. It is back.
Existing contracts mean export shipments do not respond to spot prices overnight, so the more useful question is what US plants have actually been making and where it has been going.
More NFDM, less SMP
Combined US production of NFDM and SMP rose 4.3% in the first seven months of the year, but the two products moved in opposite directions. NFDM production increased 10.6% while SMP fell 19.1%, cutting SMP’s share of the total from 21.2% to 16.4%. This is not a strict domestic-versus-export split, but SMP is the product more closely associated with export specifications, so the change points toward a greater focus on the home market.
The export figures fit that picture. Combined NFDM and SMP exports fell 6.3% to 810.8 million lb in January through July, with July shipments down 23.1% year on year. The value of those exports went the other way, rising 7.9% to $1.23 billion as the average export value climbed from $1.31 to $1.51/lb. Fewer pounds are leaving the US, and so far the higher value per pound has more than covered the lost volume.
Where those pounds land has shifted too, and not uniformly. Malaysia took less US powder and more from the EU, the Philippines bought more from the US and New Zealand while EU shipments fell, and Indonesia took more from all three. Mexico remains the anchor: 462.6 million lb of the 810.8 million lb shipped in January through July went there, 57% of the total.
The policy backdrop
All of this sits on top of an unsettled trade picture. Late on September 8 the Trump administration issued executive proclamations banning imports of several Canadian whey products, effective September 29, largely replacing the 50% tariffs that had applied to those goods. The same day, Canada’s retaliatory tariffs on roughly $20 billion of US goods, including dairy, took effect.
The rest of the US complex is split along the same fat-versus-protein line. Butter fell to $1.37/lb on a heavy supply surplus, and cheese stocks have moved above last year’s levels with no sign of dropping. NFDM and dry whey firmed, with demand for milk protein still building.
Vesper’s full US Weekly breaks down the destination-by-destination export shifts and what the powder premium means for Q4 contracting.
