This week, there’s been considerable attention on the announcement of another O.N.I.L tender. The Algerian government seeks SMP and WMP deliveries between June and September. The impact of this tender on SMP and WMP markets varies depending on who you ask.

Overall, it reinforces a bearish sentiment. Since delivery is far off and the quantity Algeria intends to purchase remains uncertain, it’s unlikely to clear European SMP stocks entirely. It’s possible Algeria is capitalizing on lower SMP prices without an immediate need for large volumes.

Early this week, European SMP prices rose slightly following the O.N.I.L. tender announcement. However, by Tuesday afternoon, futures prices resumed their downward trend seen in recent weeks and months.

The EU Vesper Price Index (27/03/2024) for SMP rose to €2300 | $2491/mt ($1.13/lb) EXW. Oceania SMP price stands at €2307 | $2500/mt ($1.13/lb) EXW. US VPI SMP price is now at €2360 | $2557/mt ($1.16/lb) EXW.

Europe is expected to fulfill SMP volumes due to competitive pricing. Currently, most EU traders offer 500-1,000mt of SMP each to the O.N.I.L tender at around €2400/mt DAP, equivalent to about ±€2275/mt EXW. Some Eastern European traders may offer higher volumes at lower prices, awaiting the tender results.

All in all, the O.N.I.L tender had a slight upward effect on the market but appears insufficient to significantly boost demand or alter SMP markets in Europe or globally. High cocoa prices are also reducing demand for chocolate and, consequently, for SMP. GDT pulse results from Tuesday (26/03/2024) showed no market changes, with prices declining to $2470/mt from $2610/mt during the last pulse event. Recent German SMP production numbers for January recorded a significant YoY decrease of -25.9%. US prices are dropping due to limited export opportunities, as Mexico cannot absorb all the supply.

Check out our latest dairy highlights for free to understand O.N.I.L tender impact on the global WMP market.