Milk price drop fears grow amid increase in supply
Published 09/08/2011 | 05:00
Concerns are growing that milk prices may drop if the current surge in global supplies continues.
The figures released last week show that the domestic milk supply is up by 13pc since the start of the quota year in April.
This increase is mirrored internationally, with global milk supplies for the first five months of this year up by 3pc.
This rise is a worry among industry analysts since demand is estimated to have increased by 1.8pc in the same period.
"It's clear that we need a supply correction fairly soon," said ICMSA president Jackie Cahill.
"Not one dairy-producing country is down this year. It's only a question of time before surplus supplies start to hit prices." Mr Cahill believes that Irish milk prices will hold for most of this year but he is worried about the impact that increased global supplies will have on returns next year.
"Droughts in New Zealand and Russia last year, floods in Pakistan and the food scare in China helped match demand with increased supplies elsewhere," said Mr Cahill.
Milk production has stormed ahead in all the major milk-producing countries on the back of favourable weather and prices this year. Argentina is up 18pc, New Zealand is up 5pc and the EU has risen 2.5pc.