Talk of a possible double dip recession taking place within international dairy markets over the coming months has been kicked to touch by ICOS Dairy Policy Executive T J Flanagan.
“The reality is that no one can predict with any degree of confidence just how the markets will perform during the period ahead,” he said.
“We should simply bag the good news that we have received courtesy of the most recent Global Dairy Trade auction results and then be ready to respond to whatever comes our way later in the year.
“My understanding of what has happened over recent weeks is that a number of international buyers were caught short for product, believing that the market would continue to slide during January February. That didn’t happen and these same people had to intervene in the market place over the last week or do in order to restore their positions.”
Flanagan admits that China remains the great unknown when it comes to predicting the policies that are followed by dairy buyers in that country.
“They seem to take quite a strategic approach when it comes to procuring infant milk formula from Irish manufacturers,” he said.
“But whole milk powder imports represent the key driver for the Chinese. They purchased 500,000t of product last year. That’s up from the 50,000t figure of a decade previous.
“In the first instance we do not know if the half million tonne figure represents a long term sustainable demand requirement on the part of China; or was this simply a case of buyers over extending themselves?
“But what we do know is that whole milk powder has a finite shelf life. My gut feel is that China will have no option but to come back into the market in the very near future, if for no other reason than to replenish their powder stocks. And when this does happen, it may well have a very positive impact on market prices.”