Milk price recovery 'has legs' despite GDT slip
The recovery in world dairy markets will continue to gather pace despite last week's fall in the Global Dairy Trade (GDT) auction, a leading analyst has predicted.
Kevin Bellamy of Rabobank dismissed the 3pc drop in last week's GDT auction as "a one-off event" and forecast that dairy commodity prices would strengthen further.
He said the recovery "still had legs" as it was based on "a shortage of supply rather than growing demand."
The Rabobank analyst pointed out that world production was down 3bn litres compared to last year and that this shortfall in supply would sustain what he termed a "gentle recovery" in prices.
He attributed the 3pc fall in the GDT to the Chinese national festival known as 'golden week', which meant their traders were not buying last week.
Bellamy's views will be welcomed by the farm organisations who were pressing this week for a 2c/l increase in September milk prices.
Boards at the main processors will meet over the next few days to set last month's milk price.
While returns to farmers have increased since July, both ICMSA and IFA were adamant that the improved sentiment on world markets justified a further lift in farm-gate prices.