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Milk price stable despite 'nervous' global markets


Rabobank's Kevin Bellamy

Rabobank's Kevin Bellamy

Rabobank's Kevin Bellamy

Milk prices will hold in the medium term despite last week's 6.3pc fall in the Global Dairy Trade (GDT) index, according to Rabobank analyst Kevin Bellamy.

While Irish processors described markets as "nervous" in the wake of last week's GDT auction, Bellamy maintained that they would remain stable through the spring.

Bigger than expected milk volumes out of New Zealand through the back end of their production season had given added weight to the GDT results, Bellamy claimed.

"I would say the outlook is pretty stable, with not a lot of price pressure in either direction," he said.

Irish processors and dairy commodity traders have cautioned that increased milk volumes out of Europe this summer, on the back of higher prices, could impact on prices. However, Bellamy insisted that EU milk production this spring and summer would not grow sufficiently to destabilise markets.

He pointed out that milk output in the Netherlands would be back by 7-10pc because of the recently introduced phosphates controls, while the British dairy sector was in flux as a result of Brexit. France and Germany could ramp up output, however. Bellamy said both countries had traditionally reacted in a measured manner to price fluctuations.

He said two areas of worry were the increased volume of US product being pushed on to global markets, and continuing poor demand for dairy proteins such as skimmed milk powder (SMP).

February milk price

Meanwhile, Glanbia will pay its milk suppliers 31c/l including VAT for February milk. The processor has also approved the terms of a new three-year seasonality scheme, commencing in 2018. It will pay a fixed 'Early Lactation Bonus' of 4.25c/l (including VAT) for milk during the last two weeks of January and for the month of February. A 'Late Lactation Bonus' will be paid on all qualifying volumes supplied during November each year.

Lakeland Dairies has also held its milk price at 31.28c/l including VAT for February milk.

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