Expect dairy volatility for next 3-4 months
The dairy market will be very volatile over the next three to four months, the President of the ICMSA, John Comer, has warned.
As global dairy prices continue to slide, the next three to four months will be very volatile for Irish dairy farmers he said, and he called on milk processors to hold the milk price at a “reasonable” level. He said there are a lot of variables in the market and any small thing can swing it either way. “We are exposed to elements that are out of our control.”
The main issue though, he said, is that volumes are racing ahead of supply. “Milk production is racing ahead of supply worldwide and that’s attributed to perfect weather conditions. However, the underlying good news is that demand is growing year on year and it will cater for the supply eventually, but we have an oversupply at the moment.
“The long-term indications are that the next three to four years will be good for dairying and it can return a profit. However, we always flag that we are concerned about how vulnerable we are to volatility.” He also said that with grain prices are falling worldwide, there is a threat that US dairy production will continue to surge.
He said Irish processors should be able to hold milk prices at a reasonable level until the back end of the milk production season, by which time the markets should be correcting themselves and before Irish production levels face into another peak.
A reasonable level will depend on what the markets return
“A reasonable level will depend on what the markets return. We feel the processors did not reflect the markets as they were going up, and they should not track them so fast on the way down. They should try to even out the milk price as best they can.
“I believe milk prices will have recovered when we get to next spring. There is an underlying positive future in dairying, but farmers are going to have to save for rainy days, but they will be more intense but shorter.”