Continued pressure on dairy product prices has led to a further drop in the FrieslandCampina milk price.
The guaranteed price for May 2015 has been lowered 3.8% to €32.00/100kg, equivalent to around 29.85c/L when adjusted for Irish constituents.
It says the reduction of the guaranteed price is based on the expectation that milk prices of most reference companies in May will continue to decline.
This is caused by slightly decreasing quotations of various dairy products because of an increasing milk supply and a stable demand for dairy products.
The guaranteed price for April 2015 included a correction of around 65 cent to compensate for the February forecast of the milk prices of the reference companies, which were estimated too low.
According to ICOS, the current market weakness is due to a combination of buyers expectations of a post-quota flush and significantly greater than expected late season production in New Zealand.
It says the effect of the now since ended ‘drought’ in New Zealand was always over played.
ICOS says buyers are now, however, looking at milk flows in Europe and markets will respond to production, or lack of it.
The key producing countries of Germany, France, Netherlands and Ireland, as well as the UK, Austria and Poland, will be watched closely.
ICOS says production in those countries is largely driven by price and weather and we know that milk prices this spring are ranging 30c/L.
It says the 30c/L level will not, in itself, drive milk production and it is unlikely to sustain last year’s level of growth (almost 5%) unless growing conditions are exceptional.