Speaking after last week’s meeting of the IFA National Dairy Committee, Chairman Sean O’Leary said the Committee were clear that co-ops still need to focus on increasing milk prices before peak, in order to deliver the 33c/l average some industry leaders have predicted for 2017, and the Committee would lobby co-op board members accordingly this month.
He said global dairy buyers’ expectations of increased milk output were not materialising in the run up to the EU peak, and the last two GDT auctions including today’s – up 1.6%, with SMP prices stable and WMP up 2.4% – have shown this was influencing their pricing decisions more positively. This, and the fact that Southern Hemisphere supplies are heading towards their trough period, he said, should reassure co-ops and encourage them to continue to help rebuild farmers’ cash flow position over the coming months.
“The Dutch are implementing a capacity-sapping phosphates-related cull, and before it even started, they have recorded a 4% decrease on February 2016 output. Ireland’s production is back 7.8% for February, France is forecast to be down 4.3% for the full season 16/17 to end March, German milk output continues well below last year’s, down 2.9% for week beginning 13th March, and the UK deliveries were around 1% below previous year for the last three weeks of March. Even New Zealand’s milk volume for February was down 3.3% – though solids were up. The US, at 2.3% up after leap year correction – 1.2% down without said correction – remains the exception,” Mr O’Leary stated.
“Of course, the 350,000t of SMP in intervention continues to overhang the powder market, and some are even predicting further sales into intervention as EU average prices have weakened in recent weeks. The EU Commission has proved its determination to avoid making any move in disposing of the intervention stock which might destabilise markets,” he added.
“Also, most other dairy commodity prices have held up better, with butter even staging a further uplift in the most recent EU Milk Market Observatory report for 26th March. Average EU prices for an Irish basket of dairy products on that date would have returned a gross 35.7c/l before processing costs, equivalent to a milk price of 30.7c/l + VAT (32.36c/l incl VAT)” he said.
“The IFA National Dairy Committee members will, this month again, lobby Co-op Board members in favour of a further price uplift for March milk,” Sean O’Leary concluded.