The Irish Creamery Milk Suppliers’ Association (ICMSA) has called on co-op boards to “avoid knee-jerk reactions” as they meet to set their February milk price.
The president of the association, Pat McCormack said that processors have the “commercial room” to “adopt a steady approach” when deciding the price that will be paid to milk suppliers.
McCormack said that the dairy market is currently “in an uncertain place”.
He added that the situation was similar this time last year until the market suddenly moved forward strongly.
The ICMSA president said that “the sale of end-of-year stocks was now out of the way”.
He described a 3.2% increase in the Global Dairy Trade (GDT) index yesterday (Tuesday, February 7), as “encouraging”, along with an increase in the Dutch dairy quotations today.
McCormack said “it is likely to be another four to six weeks before the market finds its level for 2023”.
“As always, the start of a new year is an uncertain period. But we can already identify plus and positive signs: global milk supplies are still below 2022 levels and that will keep a strong base under milk price.
“There may be some uncertainty, but co-op boards need to adopt a ‘steady as she goes’ approach on February milk price.”
The ICMSA president said that co-ops enjoyed a very successful year in 2022.
“Given that milk volumes in February are at a seasonal low, co-ops have the flexibility and commercial room to analyse market developments over the coming weeks before making decisions on the overall direction of milk price for 2023.
“They have that flexibility – they should use it,” McCormack concluded.
Milk price
Meanwhile, Cavan-headquartered cooperative, Lakeland Dairies, has warned that there is likely to be a “significant” correction on milk price in the coming months.
The co-op has highlighted to suppliers that in the past number of months dairy markets have “weakened significantly” with butter and skim milk powder (SMP) currently sitting at around 40% lower than they were in September 2022.
In its latest correspondence it pledged to “maximise the return” to members but it also sounded a cautionary note about market pressures at this time.