Dairy co-ops warned against making knee-jerk reactions
Dairy processors have been urged to take a more considered view on 2018 milk prices on the back of positive developments on international markets.
However, processors continue to caution farmers that the outlook for milk prices this year remains challenging.
Pointing to the 4.9pc lift in the latest GDT and the levelling of Dutch butter quotes at around €4,100/t, Gerald Quain of ICMSA said that now was not the time for "knee-jerk reactions" from dairy processors.
Mr Quain also pointed out that skim milk powder (SMP) prices in the USA had lifted significantly, albeit from a low base. He said this increase, and stronger oil prices, were likely to lead to firmer demand for dairy products. "Given that this is the start of our production season, ICMSA is firmly saying that co-ops need to hold January milk price and not make knee-jerk decisions," said Mr Quain.
However, speaking at an ICOS event last week, Dairygold's Jim Woulfe again warned milk suppliers that 2018 could be difficult.
"It is in the trough of the season, so it will be over the next month or two that there will be a big decision to be made," Mr Woulfe said.
The Dairygold CEO said the volumes of SMP in EU intervention stores remained a serious worry.
"The combination of butter and skim is the problem. There has been some release of SMP out of intervention, but there are still 370,000 tonnes in there and that is a problem."
Meanwhile, Dairygold has confirmed its new voluntary fixed milk price scheme which will run from this March 1 to November 30, 2020.
Dairygold suppliers must apply for the scheme before Friday, February 16. Farmers can fix either 5pc or 10pc of their supply.
It offers a fixed price of 31.25c/l, including VAT, set at reference milk constituents of 3.3pc protein and 3.6pc butterfat, including bonuses.
Dairygold chair John O'Gorman said there had been significant dairy market volatility in recent months. "The scheme will allow our suppliers to fix the returns they get from a portion of their produce and to protect their margin," he said.
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