IFA National Dairy Committee Chairman Sean O’Leary has said that this week’s very significant 9.4% average price increase in the GDT auction proved that the global dairy market recovery is now underway.
He said this was further evidence that the doomsayers talking down markets and prices late last year were wide of the mark.
GDT returns now exceed that for EU products, and this is bound to lift EU prices further in coming weeks. This should be taken on board by our milk purchasing co-ops, as a signal that they can comfortably afford to hold milk prices for January and February at least.
“While current EU average returns are weak, at around 33c/l before processing costs, and improvements in milk prices are unlikely until after peak, it is clear global markets have started in earnest on the recovery curve,” Mr O’Leary said.
“At the GDT auction, SMP made 6.7% more than at the previous auction, butter prices were 6.1% higher, and WMP prices a whopping 19.2% higher. All these products are now dearer through the GDT auction than the most recent available EU average price quotation of 25th January,” he said.
“By our calculations, the GDT prices for SMP and butter returns nearly 5c/l more than their EU equivalent and WMP just over 2c/l more,” he said.
“I believe co-ops should be able to take comfort from the now clear recovery trend, and hold milk prices at least for the medium term,” he concluded.