Sentiment is now a key factor in determining the tone of international milk markets, according to ICMSA President John Comer.
Comer said: “This may kick in given the impact which the recent heavy rain is having on New Zealand milk output”.
“And if this is not the state of affairs in the short term, then it may well be an issue as New Zealand gears up for its new milking season later this year,” he said.
Comer was responding to speculation that prices may well rally considerably at next week’s Global Dairy Trade (GDT) auction.
But, in the short term, he feels that EU production levels will have a direct bearing on Irish milk prices.
“European milk output is now increasing at a faster rate than would have been expected by many earlier this year,” he said.
I still feel that the processors can offer an extra 1c/L to 1.5c/L for April milk. After that prices may well flat-line for the peak output months of May and June.”
Comer said that the current intervention stocks of Skimmed Milk Powder (SMP) are overhanging the commercial market.
John Comer, ICMSA President
“But stocks would have been a lot higher had it not been for the EU voluntary supply management scheme for dairy.
“In fact, the ICMSA has always held to the view that the measure should have been introduced a lot sooner.”
SMP has been offered into intervention for the first time this year, with 1,201t put forward to date. Both Poland and Lithuania offered around 470t each, with the remainder coming from Germany.
EU SMP prices have been dropping since the beginning of the year, with the average price sitting at €1,790/t for the week ending April 9.
This is still €92/t above the intervention price but, with production rising towards its seasonal peak, some sellers have clearly seen intervention as their better option.