Bounce in Dairy Commodity Prices a Positive Indicator for 2014

IFA National Dairy Committee Chairman Kevin Kiersey said that the bounce in dairy market prices evident from last week’s Fonterra auction, latest spot quotes and the most recent average EU prices published by the EU Commission was a positive indicator for dairy markets at least for the first half of 2014. Mr Kiersey said this should make it easier for co-ops to make early and solid commitments for milk prices at least at current level well into 2014.

“We stand by our analysis that continued buoyant dairy markets during 2013 have generated as much as €80m more than has been passed to farmers, and the Committee, who will be meeting later this week, will continue to lobby for this. It is a fact that, while 2013 ends on a very positive note for dairy farming in Ireland, most producers are still paying outstanding input bills accumulated over the previous 18 months and during the fodder crisis,” Mr Kiersey said.

“Dairy commodity prices peaked during last spring then eased somewhat towards autumn but still remained at historically high level. Perhaps surprisingly when milk production is rising fast in the main regions, dairy prices are now actually picking up further. Average EU SMP prices lifted by a whopping €100/t in the second half of November alone, while butter, WMP, cheddar cheese and whey powder rose by between €20/t and €40/t. European spot quotes are showing a similar trend, as are international futures,” he said.

“Last week’s Fonterra auction, in which the weighted average price rose 3.9%, and only cheese saw a modest price decrease, was for trade all the way to June 2014 – an indicator that strong prices could be maintained well into the New Year,” he added

“It is clear that demand, driven by shortages in, among other importers, China and Russia, is holding up quite strongly in the face of the pick-up in output from New Zealand, the US and the EU,” he said.

“Irish co-ops must end the year with a fully justified, affordable, and necessary confidence boost to their suppliers, by passing back more from the buoyancy of 2013, and committing to at least hold current prices well into 2014,” he concluded.

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