Reasons to be positive about milk prices in 2019 – IFA

The Irish Farmers’ Association (IFA) has said the signs are there that milk prices will be firmer in 2019, as a result of a tightening in the market.

Tom Phelan, the association’s national dairy chairman, highlighted that the global supply of milk is slowing down and coming more in line with demand, which should encourage co-ops to stick to current milk prices, at least until spring.

Phelan referenced a report from Dutch banking and financial services company Rabobank, which said the milk output from the world’s largest export regions was decreasing, while supplies across the EU are also slowing.

Global milk supply growth is slowing down and coming back in tune with the current steady demand growth. Rabobank shows that output from the big seven export regions (EU, US, New Zealand, Australia, Brazil, Argentina and Uruguay) is slowing dramatically at year end.

The cause of the EU’s lower supplies is, according to Phelan, “weather-related impacts on feed and fodder quantity, quality and cost”.

He went on to add that Europe’s three largest milk producers – France, Germany and the Netherlands, which together make up almost half of the EU’s milk production, and over half of its exports – are producing “far less milk at year end”.

The EU’s intervention stock of skimmed milk powder (SMP) – which had been depressing prices until recently – has also been significantly depleted throughout the year, further reducing the amount of milk available.

“I believe there are very good reasons to expect a positive start to 2019, and I call on all co-op board members who have yet to meet to decide on November milk prices to make a firm decision to hold them at current levels into spring,” concluded Phelan.