16 Jul 2014
LAKELAND HOLDING JUNE MILK PRICE A WELCOME MOVE FOR SUPPLIERSDairy
IFA National Dairy Committee Chairman Sean O’Leary today said the announcement by Lakeland that they would join Glanbia in holding the June milk price was welcome. He said farmers in the Lakeland, Glanbia, and last month in the Kerry and Aurivo catchment areas appreciated the effort from their co-ops to help them maximise their income during peak months. He urged other co-ops to follow suite for June milk, and hold their nerve on milk price for the following months.
“While the disappointing GDT auction results this week reflect the current global imbalance in supply and demand, Irish exporters do not trade on that platform. We trade mostly into the EU, and average gross European dairy commodity returns for early July, still at around 42c/l, as well as the June IDB PPI index at 121.5 points (equivalent to 37.4 c/l incl VAT by our calculations), continue to justify comfortably current price levels,” Mr O’Leary said.
“Globally, there are reasons to expect positive changes over the coming months: Ramadan, which temporarily depresses demand from the Middle East and North Africa regions in particular, this year coincides with July, and as many dairy buyers take holidays in August, trade will be quiet over the next few weeks. Accumulated stocks will be utilised, and buyers will need to come back to markets by September to fill their needs for the end of the year, boosting demand,” Mr O’Leary said.
“Meanwhile, all eyes are on the El Nino event over the Pacific, which could cause relative drought and stem the strong growth in Australian and New Zealand supplies, affecting positively the supply/demand balance over the coming months,” he added.
“Co-ops must hold their nerve on milk prices, and bear in mind the levels of investment and superlevy related costs their suppliers will have to fund over the next couple of years,” he concluded.