The results of this week’s Global Dairy Trade (GDT) auction should at least serve to retain Irish farmgate milk prices at current levels, according to ICOS Dairy Executive TJ Flanagan.

The event was marked by a 1.1% overall increase in the prices paid, when compared with the sale held on January 20 last.

“But we are still dealing with relatively small quantities of milk,” said Flanagan.

“The big unknown remains the response of the market to the extra milk that is projected to come from Europe once quotas expire. Ten EU member states are currently under superlevy pressure.  It is expected that the production constraints will come off in these regions, once we get beyond the end of this month.”

Strathroy Director Ruairi Cunningham said that the New Zealand auction is not the definitive arbiter of the markets which impact on Irish farmgate prices at this time of the year.

“The Dutch auction is providing a much more accurate reflection of EU market conditions at the present time,” he said.

“The Fonterra auction has started to strengthen because the volumes of milk being offered for sale have contracted significantly over the recent weeks. Drought has, no doubt, been a factor in this regard, as is the fact that New Zealand milk producers normally start to dry cows off about now.”

Strathroy paid 30.5c/L plus VAT for January milk. The company is expecting to pick up more suppliers over the coming weeks. Cunningham confirmed that the company has the capacity to process all the milk coming from its suppliers, even at peak output.

“Whether we do that or not is a different question,” he said.

“Our commitment is to deliver the best possible return for all our farmers and we will look at whichever business mix delivers this objective.”