The Irish Creamery Milk Suppliers’ Association (ICMSA) has said that the strength of the PPI index and other market indicators over the last number of months have confirmed the association’s belief that the price for the remainder of the year should remain in a “positive position”.
Chairperson of the ICMSA Dairy committee Ger Quain noted that the PPI increased once more for October; its sixth consecutive monthly increase since the impact of Covid-19 in March and April.
This positive trend is coupled with European farm gate milk price data which shows that in September 2020, EU-27 average farm gate milk prices increased by 2.9% since last month to 33.95c/kg and is estimated to increase in October 2020 to 34.06c/kg (+0.3%).
He said: “Such schemes show that companies are willing to commit to improved FMP contracts to secure product – even in a post-Brexit world and with all the current uncertainty around Covid-19.
“Demand for dairy products is steady across Europe but there has been a marked increase in Asia in 2020 which is probably absorbing the extra supply of milk across the globe.
This all leads to a stable but positive outlook for the remainder of the year and into 2021.
“This increased demand across Asia may well be coupled with increased global financial positivity arising from the new political changes in the US. Future trade policy could also change in the coming months – including tariffs on Irish dairy products imposed by the Trump administration – and could move in a more advantageous direction,” Quain said.
The ICMSA is also looking at the possibility that a potential shift in US agriculture subsidisation could change global dairy market dynamics for the coming years.
The association said that based on current market indicators, the minimum price that all co-operatives should be paying for October milk is at least 32c/L.