Price rally expected at next week’s GDT auction

Expectations are rising that prices paid at next week’s Global Dairy Trade (GDT) event will rally strongly on the back of the continuing heavy rain in that part of the world.

This follows the attainment of record trading levels on New Zealand’s NZX dairy futures’ markets this week.

The belief is that the deterioration in sward quality that has occurred across most of New Zealand’s main dairying areas will impact on future milk output for the remainder of the current grazing season and, possibly, the start of next.

The IFA’s Dairy Committee Chairman, Sean O’Leary, believes that any strengthening of the prices paid at next week’s GDT event will have little or no effect on European milk prices.

“It’s too late in the season,” he said.

We will have to wait and see how the heavy rains have impacted on New Zealand dairy farmers to produce milk next spring.

“But it’s still too early to quantify the effect this may or may not have on international milk markets over the coming weeks,” he said.

O’Leary is more focused on the impact that the EU’s stock of Skimmed Milk Powder (SMP) will have on Irish milk prices over the coming months.

“Stocks of SMP are growing. And these are now overhanging the market. The reality is that SMP production will continue to gather pace as EU milk output expands over the coming months.”

O’Leary said the EU Commission can take steps to reduce its SMP stock levels, without impacting on the commercial market.

“In the past, Brussels could utilise this product in the context of the Deprived Persons’ Scheme. There is also the option of utilising SMP as part of a humanitarian aid scheme.

“But the bottom line is that the Commission must not offload SMP onto the commercial market, as this would have serious consequences for Irish milk prices later in the year,” he said.