Irish farmers have been spared the worst of the current dairy market instability due to the timing of the current market weakness according to ICOS’s latest dairy market analysis.
It says Irish farmers got the vast majority of this year’s production out in wonderful grass growing conditions and record prices and it’s the southern hemisphere farmers who are absorbing the worst of this current crisis.
ICOS also struck a positive note for the dairy market citing that most observers believe that the prospects for the market are quite strong, with balance between supply and demand expected sometime mid-2015. However it cautions that in the mean-time, however, farmers need to ensure that their own business plans are robust enough to weather this current period of low prices.
ICOS commented that notwithstanding the disastrous effects of Russian ban, the fundamental problem is a cyclical one, whereby global supply and demand are out of line.
It says in the absence of climatic or feed supply issues, which might periodically be expected to slow down milk supply, we are now dependent on either a strong low price signal to suppliers to reduce supplies, or, in the case of the EU, the impending super levy.
In addition, at the current price levels, dairy ingredients are very attractive versus competitors, and dairy consumption should be attractive, particularly in emerging nations. Indeed, sellers note that demand for Irish product remains very strong (important in the context of next spring’s expected surge), but that buyers are happy to only lock in their short term needs, in the hope that prices for new spring might weaken.