European powder markets strengthen as SMP takes the lead

European powder markets have strengthened considerably, led by a sharp rally in SMP. Despite higher production, expanding exports have helped absorb additional volumes, while prices reached their highest level since 2022. Europe’s narrowing price advantage is also bringing international competitiveness into focus.According to DCA Market Intelligence, food-grade SMP stood at €3,205 per ton on September 10, up 9.6% over the previous month and 44.4% year-over-year (YoY). Feed-grade SMP increased to €3,225 per ton (+41.1% YoY), moving slightly above food-grade SMP. Strong annual gains also continued across the whey complex, with sweet whey powder food and feed respectively 79% and 94.4% above last year at €1,880 and €1,750 per ton. Lactose stood at €1,670 per ton (+59% YoY). Whole milk powder (WMP) remained the main exception to the strong annual increases. At €3,750 per ton, prices were up 5.2% over the previous month but remained 1.3% below last year. SMP production outpaces growth in milk supply Through July, European milk production followed an upward trend, providing more raw material for processing. Germany reached 20.16 million tons (+6.4% YoY), while France produced 14.66 million tons (+2.2%). Production also increased in the Netherlands (+4.5%) and Poland (+3.1%), while Ireland remained more stable at 5.80 million tons (-0.4%).SMP appears to have particularly benefited from the additional milk supply. EU production increased by 11.7% YoY to 865,019 tons in H1. Germany produced 218,020 tons (+15.7%), while Poland (+21.6%) and Ireland (+19.4%) also expanded strongly. In contrast, Dutch production declined by 7.0%. Yet, this growth was not shared across the wider powder market, as milk and cream powders excluding SMP declined by 3.4%, indicating different allocation across powder streams.For whey powder, production is closely linked to cheese manufacturing, as whey is a by-product. EU cheese production increased by 3.5% to 5.20 million tons in H1, supporting greater whey availability. In Germany, where direct whey powder data is available, output increased by 5.3% to 193,170 tons.EU powder trade strengthens, led by SMP EU milk powder trade strengthened in the first five months of 2026. SMP trade increased by 13.5% YoY to 286,920 tons intra-EU and by 10.6% to 367,628 tons extra-EU. Germany remained the largest intra-EU supplier at 89,922 tons (+11.8%), while France increased by 31.3% to 51,790 tons and Poland by 35.3% to 19,662 tons. Extra-EU trade was led by Belgium at 70,803 tons, followed by Germany at 66,222 tons (+21.8%) and France at 62,469 tons (+16.4%).WMP trade increased more moderately, with intra-EU volumes rising by 2.9% to 91,997 tons and extra-EU by 2.2% to 78,051 tons. Ireland stood out, with intra-EU volumes increasing by 166.2% to 9,283 tons, while German extra-EU exports increased by 71%.Whey moved in different directions. Intra-EU trade increased by 3.6% to 362,198 tons, while extra-EU exports declined by 5.9% to 291,133 tons. The Netherlands reflected this divergence, with intra-EU shipments up 26.5% and extra-EU exports down 21.5%, while Germany increased its extra-EU shipments by 27.7%. Lactose weakened across both markets, declining by 4.9% intra-EU and 12.5% extra-EU.Export destinations show diverging demandSMP trade was geographically diversified. Within the EU, the Netherlands was the largest destination at 97,040 tons, up 31.3% YoY, while Italy increased by 31.1% to 42,159 tons. Outside the EU, Algeria remained the largest market at 44,512 tons, despite a slight decline. Growth was particularly strong in Egypt, where shipments more than doubled to 37,339 tons, alongside growth in Indonesia, Malaysia and Thailand, while shipments to the Philippines, Vietnam, Nigeria and China declined.WMP exports remained strongly oriented towards the Middle East, with Oman remaining the largest extra-EU destination at 21,058 tons. While shipments to Oman declined slightly, Saudi Arabia (+53.0%) and Lebanon (+41.2%) recorded strong growth. Whey showed a more mixed picture. Shipments to China, its largest external market, declined by 20.3% to 68,441 tons, while several Southeast Asian markets moved higher. Lactose demand was weaker more broadly, with shipments to the major Asian markets of China, India and Japan all declining.Higher prices challenge EU competitiveness The recovery in European SMP prices is beginning to affect its position on the international market. The DCA SMP benchmark reached €3,205 per ton, slightly above the latest GDT price of €3,186 per ton and the latest available US SMP price of €3,176 per ton. This leaves European product less competitive than earlier in 2026.However, the three regions have considerably different export portfolios. US SMP exports are heavily concentrated in Mexico, which accounts for 60.5% of volumes, while New Zealand is more exposed to Asia, led by China at 37.2% of exports. EU exports are more diversified, with Algeria and Egypt among the largest destinations alongside Southeast Asian markets. Discussion and conclusion The European powder market has strengthened, but the picture differs across products. SMP stands out, with higher production accompanied by expanding trade and sharply higher prices, while WMP has seen a more moderate recovery. Strong demand across the broader protein complex is supporting whey prices, while trade has shifted towards the intra-EU market and high protein whey production limits solids availability for whey powder production. Lactose presents a similar contrast, with prices considerably above last year despite declining trade volumes.For SMP, the strength of the rally is particularly notable given the 11.7% increase in EU production during H1. Additional output appears to have been well absorbed, with the latest June data showing extra-EU exports increasing by 16.3% YoY. Despite higher production, European stocks are reportedly tighter than expected by industry participants, while the seasonal decline in milk supply and reduced powder capacity following closures in Northwestern Europe could also play a role. At the same time, the broader protein trend is providing additional support. Together with deferred post-holiday demand and buyers seeking coverage, these conditions have further reinforced the upward movement.Looking ahead, international developments will be key to whether this strength can be sustained. European SMP has lost much of its price advantage from earlier in 2026. However, pressure on Europe will also depend on whether Mexico continues to absorb a large share of US supply, and China a large share of New Zealand supply, limiting the volumes seeking alternative destinations.