Welcoming the move by Town of Monaghan to hold their June milk price after all co-ops cut milk prices by up to 6c/l, IFA National Dairy Committee Chairman Kevin Kiersey urged all other co-ops to follow suite to support hard-pressed suppliers in some of the wettest summer conditions ever experienced.
He said, “Despite the 5.9% downturn in the average Fonterra dairy auction price earlier this week, EU commodity prices have either continued to creep up or remained stable after a month’s worth of price increases. EU Butter and SMP gross returns have risen by around 3c/l from the low levels of late May.”
“There is ample evidence that global milk supplies are slowly coming back into balance with demand growth – which itself is remaining quite robust, especially in emerging countries. In the Northern Hemisphere, milk supplies are now well past the seasonal peak. US milk supply growth has slowed down to 2.1% in May, while EU production growth has also slowed to around 2% with unusually wet conditions through much of continental Europe. New Zealand are barely now starting into their new season, and reports are of a slow beginning, with farmers unlikely to spend much on feed in light of tighter milk prices. Forecasts for New Zealand production are for no increase relative to last year,” Mr Kiersey said.
“While there is some uncertainty for the next few months because of building commercial stocks, what is certain is that the very strong supplies of the last 18 months are petering out due to high feed and other production costs and lower milk prices all over the world. There is little doubt that markets are in the process of rebalancing, and that dairy commodity prices will recover, and with them in time producer prices,” he added.
“What we need right now, is a little help from co-operatives in light of the massive price cuts already implemented, and the huge impact on both supplies and production costs which the historically wet weather is causing all around the country. Co-ops must hold their June milk price, and announce the end of milk price cuts for 2012,” he concluded.