IFA National Dairy Chairman Sean O’Leary has said the 3.2% fall in this week’s GDT auction, which traded product for the months of March to August 2017, reflects buyers’ speculation egged by the slightly less negative revised New Zealand 2016/17 milk output forecast (-5% instead of -7%).
With EU dairy returns continuing into mid-February around 37c/l gross (before processing costs), co-ops can and must remain on track to deliver 33c/l incl VAT (31.3c/l + VAT) before peak.
“Dairy farmers have had a very difficult year with cash flow stresses from late 2015, which persist on many farms to this day, and are only now starting to get relief as prices lift above costs and milk volumes start to build. The strong demand for the low cost cash flow loans lobbied for by IFA is a testimony to this,” Mr O’Leary said.
“Most co-ops have been increasing milk prices by at least 1c/l each month since July, so that January milk prices have reached around 29.5c/l + 5.4% VAT,” he added.
“With mid-February EU market returns stable and comparable to December and January levels of around 37c/l before processing costs, equivalent to a farmgate milk price of 32c/l + VAT, co-ops can and must continue with those progressive milk price increases to reach at least 33c/l for March milk,” Sean O’Leary concluded.