‘General apprehension’ over coronavirus affecting dairy markets – ICMSA

Following the fall in the latest Global Dairy Trade (GDT) auction on Tuesday, February 18 – in which the index fell by 2.9% – the market effect of coronavirus is again being highlighted.

Ger Quain, the dairy committee chairperson of the Irish Creamery Milk Suppliers’ Association (ICMSA), said that buyers are “actively holding their position”, as speculation over the short and medium-term effects of the disease hits international markets.

“The GDT index was down 2.9%, and in a context where there’s no meaningful change in underlying supply-demand data that can only mean that you’re seeing buyers retrench and you’re starting to see people build-up cash as a general apprehension builds around coronavirus and its effects on markets,” Quain argued.

We’re watching this carefully, but really there’s nothing anyone can do until we see coronavirus contained and a real confirmed downward trend in new cases – that might be happening but…we’re going to have to wait for the experts to tell us whether it represents a downward trend.

“Individual Irish co-ops are still doing well and it must be acknowledged that all milk purchasers increased their milk price for January. That’s very welcome but we’re still waiting for them to close completely the gap between farmer price and the Ornua PPI [Purchase Price Index],” he added.

“There’s no point in pretending that we’re not at the mercy of bigger factors here, but given the fact that Irish processors are likely to have ‘sold-forward’ and already have contracts and prices set prior to this coronavirus scare, we’re still positive,” Quain stressed.

He concluded: “We think that, as the picture settles down, and as we see China ‘back in the game’, then we still think that the recent upward market and price movement will and should carry through to peak-production.”

GDT

The latest GDT auction took place on Tuesday, February 18, and saw a 2.9% fall in the index.

175 participating bidders went through 18 rounds of bidding, with 138 winning bidders. The event lasted two hours and 18 minutes, with 28,181MT of product sold.

The results for the individual products are outlined below:

  • Anhydrous milk fat: Down 5.5%, average price $4,379/MT;
  • Butter: Down 3.9%, average price $4,090/MT;
  • Butter Milk Powder: Not offered at this event;
  • Cheddar: Up 5.3%, average price $4,526/MT;
  • Lactose: % change not available, average price $822/MT;
  • Rennet Casin: Down 0.9%, average price $9,873/MT;
  • Skim milk powder: Down 2.6%, average price $2,840/MT;
  • Sweet whey powder: Data not available;
  • Whole milk powder: Down 2.6%, average price $2,966/MT.

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