16 Aug 2016
AUGUST GDT AUCTIONS REINFORCE DAIRY MARKET SENTIMENT: THE 2 YEAR GLOBAL SLUMP IS WELL AND TRULY OVERDairy
Commenting this afternoon on the second strongly positive GDT auction for August, IFA President Joe Healy said that while the quantities traded through GDT were small in the context of total global trade, it was an undoubted fact that these results reinforced positively buyers’ and market sentiment all over the world. Co-ops should take heart from those results, and plan for significant further milk prices increases on July milk, but also for August and beyond.
“This afternoon’s +12.7% jump in the weighted average GDT auction price, the second significant uplift this month, is the clearest sign to date that the global dairy recovery has really taken hold,” Mr Healy said.
“Co-ops must increase milk price as it is absolutely necessary to help farmers cope with the huge demands on their cash flow, and is justified by market returns. Also, farmers are gauging whether or not to apply for the EU production reduction scheme, and clarity on the milk price outlook will be a decisive factor, bearing in mind that present prices still fall well below production costs,” he said.
IFA National Dairy Chairman Sean O’Leary added: “It is important to keep the GDT results in context, whether positive or negative”.
“However, the recent positive GDT results mirror the EU market price evolution, reflecting the lower global availability of milk, the utilisation of stocks, and the relatively good demand growth. This is why we believe they are a genuine sign that the dairy recovery, long overdue after a record 2-year slump, has now taken hold” he said.
“What we need now is for co-ops to take encouragement from the growing positive market signals, and to ensure that farmers get every cent the improving market returns allow to help them face the mounting merchant credit, utility, superlevy and other bills falling due in autumn,” he concluded.