26 Jun 2014
FIRMER PRICES ON DAIRY MARKETSDairy
IFA National Dairy Committee Chairman Sean O’Leary, who is this week in the US with the Irish Dairy Board for the opening of the new Thiel plant (Wisconsin), said the most recent EU average dairy commodity prices as reported in the EU Milk Market Observatory for 15th June indicated firmer prices after a couple of weeks of stability. International quotes as reported by the USDA for Western European and Oceanian markets also showed the same trend, as did last week’s GDT auction.
With a supply lull of sorts between the end of the European production peak and the beginning of the new Oceanian season, prices are picking up, and the signs are multiplying that the dairy market slump could now be at an end.
This, Mr O’Leary said, should give Irish dairy co-ops the confidence to hold their June milk price to allow farmers maximise their peak milk income, and proceed prudently with any further milk price adjustment thereafter.
“After a six-months slide, EU average dairy prices have stabilised in recent weeks, and have all inched up by nearly 1% in the week of 15th June. Spot quotes since then indicate that this trend is continuing. Mid June EU commodity returns, at around 42c/l before costs, would easily sustain current milk prices,” Mr O’Leary said.
“While we acknowledge that returns have fallen since the peak of January/February, we believe all evidence now is that markets are turning. Co-ops must minimise the overall impact on dairy farmers’ incomes of the lower returns,” he said.
“Despite nearly 12 months of “good” prices and margins, farmers’ cash flow needs continue to be very significant, as they carry the cost of increased stock numbers in anticipation of the end of quotas and will almost certainly face superlevy fines for the current quota year,” he said.
“Furthermore, it is crucial for co-ops that they would preserve goodwill and confidence at a crucial time of profound changes in the sector, and milk price decisions send very powerful signals in this regard,” he concluded.