Irish milk prices set to break through the 30c/L barrier

Milk prices should break through the 30c/L barrier this month, according to IFA Dairy Committee Chairman Sean O’Leary.

“We have continued to see a significant fall back in milk output across the EU, so there is every prospect of the co-ops adding another 1c/L on to the price they pay for December milk.

“And that should get us through the 30c barrier,” he said.

O’Leary believes that the prospect for dairy prices remains positive right up to the end of June this year.

“I don’t think European farmers will be able to turn the milk production tap back on that quickly, such was the scale of culling that took place at the back end of last year. Many farmers will also prioritise on paying back debt, before they consider increasing output.

“All of this bodes well for Irish milk prices over the coming months.”

O’Leary welcomes what he regards as the strategic way the EU Commission is selling off intervention dairy stocks.

“It’s clear they are not going to offload powder stocks in a way that will undercut the market. And, again, this is extremely positive.

“Only 42t of intervention stocks were sold prior to Christmas with Brussels sticking to its previously made commitment of not under selling this product.

“It is crucially important for this policy to be maintained.”

The IFA representative pointed out that the availability of ‘competitively priced loans’ [the low-cost loan scheme] courtesy of the Strategic Banking Corporation of Ireland (SBCI), will also help boost confidence within the dairy sector.

My understanding is that the measure will come on stream later in January.

“But, obviously, we need to see the detail and specifically the role which will be played by Ireland’s pillar banks in making this happen.”

Meanwhile, Rabobank has confirmed that milk supply from the world’s main dairy export regions fell by 2.6m tonnes during the second half of 2016. T

his trend is most discernible in New Zealand and the EU.

In addition, domestic demand for dairy products in the United States and Europe has continued to strengthen. As a result, global dairy prices have rocketed upwards, increasing by over 45% in the second half of 2016.