Will 2018 be a sobering year for milk prices?

Irish dairy farmers were paid a base milk price of 34-35c/L (including VAT) for milk collected during the month of July.

Coming from the market lows of last year, the appetite for expansion and growth among farmers has grown significantly this year.

But what does 2018 hold for milk prices?

Speaking at yesterday’s Agricultural Science Association (ASA) Conference in Kildare, Glanbia’s Jim Bergin touched on the outlook for dairy markets into next year.

The CEO and Director of Glanbia Ireland said: “The most immediate factor [influencing milk price] is weather.

“Secondly, we have to look at what is happening now. France and Germany have recovered their position and are getting back to parity with last year.

“So, it will be later in the year before we see what impact that will bring.”

Jim Bergin, CEO, Glanbia Ireland, Mary Delaney, ASA President, Jeroen Elfers, Director of Corporate Affairs Friesland Campina, and Prof. Nicola Shadbolt, Director of Fonterra Cooperativenational agri-food leaders offering insights on how the industry can remain competitive. Image source: Finbarr O’Rourke

Bergin added that a weaker US dollar, higher European production and the potential for strong supplies from New Zealand all need to be considered.

When the three of those come together on a more level playing field than there was, and you see the US with a stockpile of cheese and skim, it will have a sobering effect on the market to some degree.

“I don’t want to be too negative; but there will probably be more of a neutralising effect at play in 2018.

“There is no reason to think that we are in for a bad time; but we’re probably not in for the great time that we currently have.”

When pressed on his prediction for a 2018 milk price, he said: “It would be too dangerous for me to call it.

“But, we hover around an average [milk price] here in the low thirties and that’s the tipping point all the time.

“I wouldn’t suspect that we are going to have an overheated market in 2018. At the same time, I don’t think we’re going to have a very negative market either,” he said.