World oversupply pushes SMP price down Prices for skim and whole milk powder are falling in the European market, as an over-supplied world market makes third country exports more difficult and expensive for the EU budget. According to the German market intelligence agency ZMP, the situation has been made worse by the dip in EU demand for skim milk powder for calf feeding in the aftermath of the foot and mouth disease outbreak. But the major bear factor in the market, according to ZMP, is the decline in export demand for whole milk powder and skim milk powder. The fall in demand for whole milk powder has pushed a greater proportion of milk into EU-supported skim powder and butter ­ thus increasing the oversupply of SMP on the EU market. Overall, EU SMP exports were 50% down in the first six month of this year and WMP deliveries to third country markets 20% down compared with the same period in 2000. Exporting has been made more difficult by the export subsidy policy currently being pursued by the European Commission. The need to keep expenditure below the Berlin Agreement ceiling has forced the Dairy Management Committee to eliminate the comfortable margins above the EU/world price gap which used to be built into dairy export subsidies. Recently export refunds have been cut to zero on SMP and the situation has been made worse by hardening of the euro against the US dollar. {{CANNED GOODS }}

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