Albeit early days in the process, the EU Commission has so far struggled to find serious bidders for the 22,000t of skimmed milk powder (SMP) that it has offered for sale by tender. It must be remembered that this volume represents just 6% of the total amount (354,000t) of SMP the EU currently has sitting in intervention.

To date, the Commission has opened two tenders for selling this SMP stock, but has sold just 40t of product. In the latest tender, which closed last week, the EU Commission confirmed it had rejected all offers made for the SMP stock as they were deemed to be too low.

The Commission said bids were received for close to 12,000t of SMP last week, with offers ranging from €1,651/t to a top of €1,961/t – all of which were rejected.

At the first tender, which took place last month, the EU Commission sold 40t of SMP at prices ranging between €2,150/t and €2,200/t.

On European markets this week, SMP is trading at €2,170/t, while at the latest GDT auction in New Zealand, SMP prices averaged more than €2,500/t.

With real-market prices for SMP providing improving returns such as this, the EU Commission will be very reticent to sell its SMP stocks sitting in intervention for prices well below the market, especially considering the damage it could cause to improving dairy market sentiment.

Expect the game of cat and mouse between buyers and the EU Commission to continue for a while longer.