Dairy co-ops must upwardly review their farmgate milk price projections for 2015, in light of the recent Global Dairy Trade (GDT) auctions in New Zealand, according to ICMSA Deputy President Pat McCormack.
“Talk of 27c/L as an average price for the next 12 months no longer stacks up,” he said.
“In the first instance the current prices must be maintained, at the very least, until the end of March.
“At that stage the processors should be in a position to more accurately predict the trends that will impact in both EU and international markets during the rest of 2015.”
McCormack’s growing confidence in the future for farmgate milk prices in Ireland is based on a number of factors. These include the recent fall-off in New Zealand milk output, caused by drought conditions, and the cut back in milk production in those EU Member States facing large superlevy bills for 2014/15.
“We are also seeing significant increases in the prices paid at the Dutch dairy trade auctions,” he said.
“Fundamentally, international markets are driven by supply and demand. New Zealand milk output has fallen back by approximately 15% over recent weeks.
“The weakening euro is also helping to boost Irish dairy exports. It normally takes two to three months for the trends recorded at the GDT auction to be reflected in the farmgate prices paid here in Ireland.”
ICMSA views the very strong rebound in butter and powder prices at the recent GDT events as being particularly relevant for Ireland: whole milk powder returns strengthened by 20% on Tuesday of this week, compared with the results of the January 20 auction. The equivalent figure for butter was 6%.
“All of this is good news for Irish milk producers,” said McCormack.
“The bottom line is that farmers can – and will – expect farmgate price forecasts to be revised upwards for this year.”