‘Steady as she goes’ where milk prices are concerned for the next 6 months

It will be “steady as she goes” where milk prices are concerned for the next six months, according to Dairygold CEO Jim Woulfe.

Speaking to AgriLand at the launch of the processor’s new €86 million Nutritional Campus in Mallow last month, Woulfe outlined that it will ultimately be a case of supply and demand.

“We’re reaching a little bit of a plateau at this point in time. Now milk prices are bordering in the region of 35c/L or 36c/L for base price. There is a more flattening out in terms of international markets. Butter is where it’s at; fat is where it’s at, as the saying goes now.

“But that is very, very volatile. Because you cannot go from being €2,550/t for butter fat in March 2016 to arrive at a position now where it is €6,800-7,000/t. That isn’t sustainable; we’re going to come off of that.

“Hopefully the demand will continue on out ahead for other products and they’ll catch up. But overall it is a very good season,” he said.

However, at the most recent Global Dairy Trade (GDT) auction yesterday (October 3) the butter price index decreased by 3.6%. Currently the butter price stands at approximately €5,000/t.

I see the next six months – so right up until April of next year – being ‘steady as she goes’. After that, I wouldn’t hazard a guess at this point and time. It is a subject of supply and demand; that is the biggest challenge.

“Butterfat is in vogue, which means that there is people using dairy creams in recipes now – five years ago it was veg fat, it was all alternatives.

“Now it is coming back and focusing completely on butterfat and people want a share of that,” Woulfe added.

The Dairygold CEO also highlighted the fact that there is “onward global demand for dairy” products in Asia, the Middle East and North Africa in particular.

“Our job is to make sure that we are able to fulfil those needs by adding value to the members’ milk in Munster; converting it into the most premium of products with the best equipment in the world that’s available and to get a decent margin to pay our members back in terms of milk price,” he concluded.

Meetings are expected to take place in the coming weeks where processors will make a decision on their milk prices for September supplies.