Butter now the most volatile commodity in the world
There are mixed signals from global markets on dairy demand for 2019, reports Louise Hogan
Volatility continues to be a major influencer in the dairy markets, with butter fluctuating more than a barrel of oil, according to Ornua trading specialist.
There are currently "mixed signals" coming from the marketplace, with the demand for dairy in European markets proving sluggish through 2018, said Ornua's trading and ingredients managing director Joe Collins.
"Within dairy, butter has actually been the most volatile commodity in the world, even more volatile than even oil. It has swung around by around 65pc from highs to lows in the last 12 months," he said, with the trade wars, extreme weather events and Brexit all adding to the unpredictability.
Currently, he is forecasting that the milk price should hover around the 30-32c/l mark, including VAT, for the year. However, Mr Collins said he is currently leaning towards the 30c/l mark at the moment.
The Irish milk pool is expected to grow by around 4-6pc this year, with co-ops reporting a combination of current herds continuing to expand and new entrants in to the marketplace.
Following a mild winter and early spring, cows are approaching peak production in good condition. "Milk is expected to push on, we are probably seeing that more so in the UK and Ireland in the last few weeks but also in places like Poland. Europe looks like milk production after being flat for the last six months will push on," says Mr Collins.
"The key thing we will watch over the next few months is European milk production, particularly over the April to August period, which is the flush or peak period."
It comes as Ornua revealed a boost in both revenue and operating profits, with Kerrygold butter recording a "stand-out" year as the number two butter brand in the US recorded 25pc volume growth with 2.6 million packets sold a week.