The Irish Dairy Board’s latest forecast of farm gate milk price for 2015 stands at 26-27 c/L, according to Chief Executive Kevin Lane.
Speaking at the Positive Farmers’ conference in Tipperary, Lane said the current IDB PPI forecast for 2015 averages 90 and this indicates a milk price of 26-27 c/L.
Lane said the IDB outlook for the year ahead is for a difficult year for dairy farmers. On the current market situation, he said a combination of record global milk output, high stocks and slowing demand (Russia and China) has weakened prices.
Lane said milk output looks likely to sustain momentum into 2015. He said this is likey due to additional EU capacity in preparation for milk quota abolition in 2015 and US output responding to high domestic prices.
According to Lane current market sentiment is still weak.
He said buyers concerned about further weakness have slowed and moved from strategic buying to tactical buying and suppliers are nervous and concerned about stock build up and falling stock values.
Lane said milk prices lag product prices by about three months and farmers have yet to see the full impact of price declines in 2014.
According to Lane, the market will remain weak until supply is constrained and/or buying and demand recovers.
He said there are signs of market sentiment beginning to stabilise albeit at very low price levels and trade activity.
Lane also stated at the conference that milk prices in mid to high 30s are not a sustainable long-term norm. He said such prices drive excessive supply and constrain demand growth.
“Markets have become extremely volatile, the volatility normally originates from the supply side with weather the key catalyst,” he said.