Middle East Conflict: EU Skimmed Milk Powder Prices Surge Amid Supply Escalation

Expana Benchmark prices for EU skimmed milk powder have steadily risen since the start of the year, climbing to €2,525 per metric ton by Feb. 26 from late-December lows at €1,950 per metric ton — a gain of almost 23%. Geopolitical turmoil in the Middle East was cited by market participants as a key driver of the increase.

In recent years, Iran has become a significant player in the dairy sector, processing millions of tons of raw milk annually and converting much of it into skimmed milk powder for export.

For many food processors across the Middle East, sourcing from Iran offers shorter transit times, lower freight costs and a reliable monthly cadence of supply — advantages that matter for dairy drinks, confectionery and bakery manufacturers that require consistent inputs.

Trade flows highlight Iran’s expanding role. Estimates indicate Iran exported about 182,000 tons of milk powder in 2025, up by 27% year over year and roughly 134,000 tons more than in 2021.

This growth propelled Iran past Australia to rank as the fourth-largest global exporter, behind the European Union, New Zealand and the United States. Major buyers include Pakistan, Iraq, the United Arab Emirates and Afghanistan, underscoring Iran’s strategic market reach.

With benchmark prices for EU SMP at a five-year low entering the year, heightened geopolitical risk in parts of the Middle East prompted buyers in the region and Southeast Asia to secure stocks early, supporting prices. Much of the rally in the first two months of the year has been factored in.

Looking ahead, if the conflict persists and drives up energy prices, the sector could face another year of record highs, mirroring the spikes seen during the Ukraine invasion.

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