2021 will be a good year in the dairy sector, according to Dairygold CEO Jim Woulfe.
Following the announcement of the co-op’s financial results for 2020 yesterday (Wednesday, April 7), Dairygold’s CEO Jim Woulfe, chairman John O’Gorman and CFO Michael Harte spoke to Agriland to discuss last year’s performance.
As part of the interview, the Dairygold leadership were asked what the prospects are for milk price for the rest of 2021.
Milk price
In his reply to this, Woulfe said: “As the standard answer would be, ‘the markets will dictate the price’ – but what way are the markets?
“This year you have to say has been quite a positive year for one particular reason.
“Milk supplies from a global perspective have become more muted or toned down. Last year’s deliveries globally were about 1.6% or 1.7% of an increase on the prior year. This year it’s between 1% or 1.2%.
“So, the actual supply and demand has become more fine-tuned and in balance, leading to a bit of tension,” the CEO explained.
“In particular, where you have the retail channel from a dairy food point of view robust with Covid, now you have the re-emergence of the actual food service channel. With the two of those, the demand side is a little bit better. That’s creating that little bit more tension in the market.
“Commodities are by and large moving anyway right across the globe as you will see in all sorts of shapes and fashion.”
Continuing, Woulfe pointed to strengthening oil prices, which reached as high as $68 a barrel, as an indicative trend, noting that this is good for the purchasing power of the countries such as those in the Middle East and North Africa, who are depending on powder and have oil reserves.
“The Global Dairy Trade auction yesterday was another stabiliser – and that’s what you want to see.
“Are we getting into a bit of a steady state now at this level? Of course everyone wants to keep going up and up but high prices cure high prices.
“I would say to you that the prospects are reasonably positive for the year now. You’d have to say that on the basis that supply is fairly balanced and demand is good and strong.
“So, [I’m] happy from that perspective – and I think it’s going to be a good year in dairy,” the CEO said.
Early milk supplies
When asked as to how milk supply had been for Dairygold for the early part of the year, Woulfe said:
“Our year-to-date position is that we’re 7.6% up on milk for the first quarter up until last Sunday [April 4].
“Our run rate at the moment is between 3.5 and 4% a week; it was higher earlier on.”
Describing the first quarter of 2021 as “good year”, he added: “It was very wet in February but weather picked up a bit in March.
“It was a year of good compact calving and grass at the appropriate time.
“It’s been a good year for milk so far to be truthful,” the Dairygold CEO concluded.