All eyes on next Fonterra auction

The global growth in milk output since the beginning of the year has served to put pressure on world commodity prices, according to Bord Bía’s sector manager for dairy David Owens.

“Supply and demand factors have kicked in over the past number of months,” he said. “International demand for milk products remains extremely strong. But with the increase in milk output that has been recorded in New Zealand and subsequently in the Nothern Hemisphere, it was inevitable that milk prices would fall back form the historic highs of recent months.

He went on to say that the last Fonterra auction in New Zealand marked an end to the slide in prices recorded since the early months of 2014. “And, yes, Dutch dairy commodity prices have also started to strengthen again. But it is still too early to gauge if this is the start of an upward trend in market returns or a general stabilisation within the market place. So it will be very interesting to gauge how the Fonterra auction performs over the coming weeks.”

Commenting generally on the prospects for Irish dairy, the Bord Bía representative said that all the signal remain reasonable strong.

“Global demand for milk products is likely to grow by about 3% per annum over the coming years. And this is a good news story for Ireland. Our predominance with the infant formula sector is of equal significance. Ireland currently accounts for 10% of the global infant formula market. We are internationally recognised as a centre of excellence within the sector, And, obviously, we want to build on this for the future.”

Looking ahead Bord Bíá regards the projected 50% increase in Irish milk output as providing the industry with a further opportunity to do increased business with all of the world’s leading dairy purchasers.

“Scale of operation is a key driver within the sector,” he stressed. “And this is as relevant to those key multinationals who are involved in the development of infant formula specifications as it is those businesses involved in the commodity trading of butter, cheese and powders.

“The new Dairy Quality Assurance Scheme for Ireland, which has been included within the scope of the Origin Green initiative, is a unique driver for growth, given that it includes a key focus on dairy sustainability. It is our intention to profile the strengths of the Scheme within the EU , US and Saudi Arabian markets later this year.”

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