2017 Dairy Outlook Strong Enough for Co-ops to Deliver 33c/l – O’leary

IFA National Dairy Committee Chairman Sean O’Leary today (Monday) said that, while there are concerns over SMP intervention stocks, EU Commissioner Phil Hogan has made it clear he is determined not to sell except “at the right price”.

Mr O’Leary pointed out that there were clear indications that 2017 would see only very modest volume increases, and dairy prices mostly stable at relatively strong levels. As co-ops will meet this week to decide on March milk prices, Mr O’Leary said, this must strengthen their resolve to up prices further and deliver at least 33c/l before peak, to allow Irish milk producers to re-build their balance sheets and clear out merchant credit and other short term debt.

“In its first Dairy Quarterly Report for 2017, Rabobank sees continued strong demand for butterfat, accompanied with high prices. Levels of global milk production continue to fall, even if the rate of decline is decreasing. Volumes of exportable surpluses are likely to remain low until at least the second half of the year. China is expected to increase imports by 20% milk equivalent to replenish depleted stocks, which will sustain balanced WMP markets. Despite the high intervention stock, and its re-opening for the purchase of 472t from Poland in late March, spot quotes for SMP last week were stabilising just above intervention buy-in price. Dairy markets are actually historically strong,” Mr O’Leary said.

“With milk volumes still below year prior, we have yet to see the production growth expected from improved milk prices anywhere bar in the US. Even in New Zealand, where February statistics suggested a recovery in production, last week’s cyclone Debbie and ensuing floods are predicted to damage pasture, increase feed costs and could put a damper on output for the new 2017/18 season,” he said.

“All in all, I remain confident that 2017 will prove a strong dairy year. Irish dairy farmers must be able to capitalise on it with their peak milk, and I urge all co-op board members to put a plan in place to lift milk prices further, starting with March milk,” Sean O’Leary concluded.