Positive outlook for milk prices – ICMSA

Milk market indicators have shown positive developments in the last number of days according to the Irish Creamery Milk Suppliers’ Association (ICMSA).

Chairperson of the ICMSA dairy committee Gerald Quain said farmers are feeling increasingly confident about milk prices over the next few months.

Quain cited the news that New Zealand’s main milk purchaser, Fonterra, has raised its farmgate milk price range to $6.80/kg of milk solids, up from $6.40/kg of milk solids.

The factor behind the improved forecast is an increase in Chinese demand for, particularly, whole milk powder.  

Future outlook for milk prices

Quain said the resurgence in demand from China and other regions is also responsible for the recent positive Global Dairy Trade (GDT) auctions and was based on a much more optimistic estimate of demand compared to that being expressed by some Irish processors.

Closer to home, the ICMSA noted the most recent fixed milk price offering from Kerry Group for March to October 2021 is returning a base of 32c/L.

The association said that like the Fonterra price rise, it shows a belief that milk markets are fundamentally sound for the coming months and beyond.  

“This offering of 32c/L gives Kerry suppliers options to lock-in at that price, but also provides confidence to farmers supplying other milk processors on the market outlook and increases the likelihood of better priced fixed milk prices (FMPs) being forthcoming in the coming months,” said Gerald Quain.

“There will always be downside risks in the milk market,” Quain added, and he listed Brexit, Covid-19 or a sudden spike in milk supply as being among those under consideration.

He said that decisions had to be made based on known facts and on the basis of increased demand and higher prices.

“Dairy markets were well situated and poised to move forward in a way and with a steady momentum that had to be recognised by processor boards sitting down to decide milk price,” concluded Quain.