The first half of 2016 will be critical for Irish dairy farmers, due to likely liquidity issues on farmers, according to Mark Voobergeb, of Voorbergen Consultancy.
The Dutch dairy consultant worked for Rabobank for 12 years told the Teagasc Dairy Conference in Kilkenny that a global turnaround in the dairy markets may take longer than expected due to the ongoing weakness of Chinese imports; the Russian ban; and the strong milk supply in Western Europe.
He also told the Teagasc Dairy Conference that the fall in imports of China affected New Zealand most whereas the Russian ban hit Europe more.
He said that the main question is when and if China and Russia will return to the market.
Milk prices in the EU and the US are not good, but they’re not that bad either. It’s relatively ok because of the low-cost based systems in Ireland. On the continent those with high debt levels, who invested a lot, are complaining but it’s not terrible.
The second half of 2016 will be a lot more positive, than the first half of 2016, when it comes to the trading of milk products worldwide.
He said the traders left with a lot of powders on their hands this year offloaded them at very reduced prices to sell them. However, they also managed to sell the whole milk powder that was destined for China in alternative markets, including north Africa and the Middle East.
Do not expect Russia to quickly grow back to the kind of import levels it used to have. But the sentiment of Russia re-opening will have a huge impact on commodity prices.
Cheese had to be reallocated, with the US and Japan and Korea taking extra volumes.
He also said that of the main drivers of the current global market unbalance is the EU milk supply, which he said probably has the biggest relative impact and therefore, holds the key to a tighter market balance during 2016.