Skimmed milk concentrate prices decline as surplus skim circulates in the EU

SMC prices have continued to weaken in recent weeks, reflecting how quickly surplus skim moves through the EU’s integrated processing network. Higher raw-milk availability, increased powder production and limited extra-EU demand have shifted the balance, with most SMC volumes circulating within a small number of processing regions. This report examines how these surplus-driven dynamics are shaping SMC valuations and what they imply for the months ahead.According to DCA Market Intelligence, skimmed milk concentrate (SMC) benchmarks reached €1,400 per ton on November 20, 13.6% lower than the last month and 41.8% below the same period last year.Typically, SMC prices increase through winter and retreat during the spring flush in April and May. This year, however, the market followed a divergent pattern, marked by a persistent decline and elevated volatility, reflected in a coefficient of variation of 16.3%.Considering that SMC is a midstream ingredient positioned between liquid skimmed milk and powdered derivatives, its price dynamics are highly correlated with spot milk prices in Northwestern Europe (85–91%) and skimmed milk prices (84%). Strong correlations also persist with SMP food (77%) and feed (81%) benchmarks. This suggests that SMC reacts to the same supply-driven pressures shaping the broader milk solids complex, while also transmitting short-term movements in raw milk availability.Skimmed milk production and sales Since SMC is derived from skimmed milk, tracking changes in skimmed milk production and sales is essential. According to the Prodcom database, EU availability of skimmed milk(1) reached 2.88 million tons in 2024, marking a 5.8% decline from the previous year. The decline was driven by the bloc’s two main producers, Germany and France, which together account for 76% of total production. German output fell by 4.2%, while France recorded a sharper contraction of 17.5%. This was only partially offset by a strong rebound in Italy (41.8%), leaving the market entering 2025 in a structurally tighter environment.Milk supply pressures Although skimmed milk data for 2025 is not yet available, market signals indicate that the dairy sector is currently under pressure from exceptionally high raw milk availability. As of August, EU milk collections increased 3% YoY: Germany +6.1%, the Netherlands +6.9%, France +5.8%, and Belgium +6.1%.Skimmed milk is essentially a surplus product, and processors generally avoid selling it in liquid form because it is bulky and inefficient to transport. When they have the capacity, they instead concentrate this surplus into SMC. As milk inflows rise, this pressure becomes more pronounced: more skim needs a destination, increasing reliance on SMC as channel for the market pressure and shaping its short-term availability.SMP production increases Skimmed milk powder (SMP) is one of the principal end products derived from SMC, and its production shows a –72% correlation with SMC prices, reflecting the inverse relationship between output and prices.As of September 2025 (YTD), the EU has produced 1.10 million tons of SMP, up 2.3% YoY. Most of this increase stems from an expansion in the latest months following weaker early-year volumes. France ended the period +1.2%, Germany +8.4%, and Belgium broadly in line with last year. Internal trade Most SMC(2) is traded within the EU, reflecting the logistical constraints of long-distance liquid movements. As of August, intra-EU trade reached 401,121 tons valued at €397.7 million, up 3% in volume and 6% in value YoY. Exports grew in Germany (+5%) and the Netherlands (+13%), while France posted a modest decline (–2%).Flows remain highly concentrated, with majority of volumes directed to Greece (130,269 tons, +21%), followed by the Netherlands (80,610 tons) and Germany (62,472 tons). A closer look at these flows shows that several member states act as both major exporters and importers. This is expected for a product like SMC that enters the market mainly in response to surplus rather than deliberate production. The Netherlands exemplifies this: despite being the bloc’s third-largest exporter, it is also the second-largest importer, drawing about 95% of its inflows from Germany, France and Belgium. This reflects a tightly connected intra-EU network where surplus SMC circulates quickly between neighboring plants whenever seasonal peaks or processing constraints create temporary excess.International trade According to the Comext database, the EU exported 35,324 tons of SMC as of August, valued at €52.9 million, a decline of 26.8% in volume and 25.4% in value YoY. Shipments fell across all major exporters, including the Netherlands (–27.8%), Germany (–36.7%) and Belgium (–11.2%), while smaller suppliers such as Ireland (1,177 tons) and Spain (918 tons) registered increases from a low base. Extra-EU demand was concentrated in Libya (10,101 tons, +37%), Hong Kong (8,329 tons, +1%), and China (3,539 tons, –33%), reflecting contrasting regional dynamics between North Africa and Asia.By contrast, EU imports of SMC rose 38% YTD to 31,878 tons, with 99.9% originating from the United Kingdom. These supplies were destined primarily for France (14,075 tons, +35.4%), the Netherlands (10,939 tons, +45.2%), Belgium (3,920 tons, +9.5%), and Ireland (1,699 tons, +10.2%). The strong reliance on UK-origin product underscores continued integration in skim supply chains despite Brexit, with UK processors servicing intra-EU demand.SMC–SMP overlap in processing regions SMP export patterns provide useful context for understanding how SMC can be absorbed within EU processing routes. As of August 2025, the EU exported 524,240 tons (+3% YoY) of SMP(3) to extra-EU markets and 391,974 tons within the bloc, with shipments concentrated among the same countries that dominate SMC trade.Germany illustrates this overlap: it is both one of the largest SMC importers and a major SMP exporter, reflecting its substantial drying capacity. The Netherlands and Belgium show a similar dual role, functioning as intake hubs for SMC while supplying significant SMP volumes abroad. Poland fits the same pattern, ranking among the largest intra-EU SMC importers and using these inflows to support its SMP export position.Conclusion and discussion The 2025 SMC market has been shaped less by structural demand shifts and more by how the EU has managed a sudden increase in surplus skim. After entering the year with relatively tight skim availability, the abrupt rise in raw-milk collections from mid-year expanded the surplus faster than processors could absorb internally. In such conditions, SMC behaves not as a product produced with intention, but as an intermediate step used to move skim that cannot be processed locally in a more efficient or profitable way. This explains why SMC supply tends to surface seasonally, during holiday slowdowns or operational constraints, rather than following a smooth production curve.Trade patterns reflect this behavior. Core processing regions such as Germany, France, the Netherlands and Belgium continue to operate as both exporters and importers, reflecting a system where excess skim is redirected quickly to available capacity within the EU. Greece remains the main destination for SMC within the EU, but its demand is not enough to offset the wider surplus, with buyers generally sourcing opportunistically from excess volumes rather than driving production as well.International demand offers limited relief. Extra-EU exports have declined and remain concentrated in just a few destinations reflecting the niche role liquid concentrates play outside the EU, where logistics favor powders. The drop in Chinese demand and the EU’s growing reliance on UK-origin imports reinforce that SMC is largely an internally balanced product, with benchmarks driven by how quickly surplus skim is absorbed across EU processing hubs and channeled into the powder stream.Overall, the 2025 SMC market reflects how the EU manages surplus skim within a tightly connected processing network. With SMC functioning as a seasonal and operational outlet rather than a targeted product. Limited external demand keeps the market largely internally balanced. In this context, SMC remains a practical mechanism for moving excess skim through the system, shaped mainly by short-term supply dynamics. While current conditions point to oversupply, shifts in milk volumes could be felt quickly given the market’s high level of integration.Footnotes: (1) Prodcom code 10511137: Milk and cream of a fat content by weight of 2 l.(2) HS code 04029110: Milk and cream, concentrated, of a fat content by weight of