The latest sales of Skimmed Milk Powder (SMP) out of intervention show that 99% of product held there has now been sold which indicates a market that’s going to be positive in 2019, according to a milk suppliers’ lobby group.
The Irish Creamery Milk Suppliers’ Association’s (ICMSA’s) Dairy Committee chairperson, Ger Quain, said: “Milk production growth has slowed across mainland Europe and the lower global supplies we saw in the fourth quarter of 2018 are set to continue for the first half of 2019.
Milk is no different to any other commodity in terms of the supply-demand dynamic setting price and the tightening supplies are having an impact.
“We’re not surprised to see spot prices in the Dutch quotations returning over 32c/L after processing and including VAT for the Butter/SMP combination.
“This is up 4c/L since the start of December and reinforces the ICMSA’s view of a market that is increasingly ‘bullish’.
“Similarly, the Whole Milk Powder (WMP) returns are over 32c/L – up 3c/L in that same period. Butter price continues to remain constant, but attention is really on the significant rises in powders in the last quarter of 2018.”
The ICMSA spokesman pointed out that the main stumbling block for powder price had been the intervention stock overhang.
“That series of sales of SMP out of intervention has been rightly acknowledged by Commissioner Hogan as a success, but ICMSA is still advocating the retention of intervention at the minimum buying-in value and not a tendering system.
“We think that that – allied to an established and functioning Voluntary Reduction Scheme – would really put support under milk price.”
Concluding, Quain said: “All in all, milk markets are moving steadily forward in a positive direction and this had better be reflected in the coming months with the Ornua PPI as the minimum starting point for that significantly better price.”