Global prices fall­ing for dairy prod­uct

Irish Examiner - Farming - - NEWS - Stephen Cado­gan

With many dairy mar­ket trends tend­ing down­wards, it was no sur­prise when the Global Dairy Trade Price In­dex dropped by 3.5% on Tues­day. Prices fell de­spite weak milk pro­duc­tion in New Zealand, the No 1 dairy prod­uct ex­porter.

The price for New Zealand’s main prod­uct, whole milk pow­der, slumped 5.5%, de­spite New Zealand’s Septem­ber milk col­lec­tions fall­ing 1.6% be­hind last year’s fig­ures, to their low­est to­tal for the month since 2012. This is due to the coun­try’s cold, wet win­ter, and a wet spring. Mar­ket an­a­lysts sus­pect that Chi­nese buy­ing of milk pow­der dry­ing up for the time be­ing was a fac­tor in the Global Dairy Trade Price In­dex fall­ing to a seven-month low, its third con­sec­u­tive fall, and the largest since Jan­uary, when the first GDT auc­tion of the year dropped by 3.9%. Mean­while, but­ter prices have been fall­ing from this year’s record highs, with the EU price fall­ing a fur­ther 4.3% in the last week of Oc­to­ber, bring­ing to 14% the price fall from a mid-Septem­ber high. And prices of skim milk pow­der in the EU have con­tin­ued to fall, partly blamed on the EU’s huge in­ter­ven­tion store of pow­der de­press­ing the mar­ket. How­ever, the skim price in Tues­day’s Global Dairy Trade auc­tion gained 1.2%.

Global dairy mar­ket weak­ness comes at a bad time for Euro­pean Com­mis­sioner for Agri­cul­ture and Ru­ral De­vel­op­ment Phil Ho­gan, who warned at last week’s IDF World Dairy Sum­mit in Belfast that the sig­nif­i­cant skim milk pow­der stocks ac­cu­mu­lated dur­ing the cri­sis years 2015 and 2016 must be ad­dressed.

“While this pub­lic in­ter­ven­tion had an un­de­ni­able mar­ket sta­bil­i­sa­tion im­pact, the very ex­is­tence of those pub­lic stocks is weigh­ing on the mar­ket.

“I also be­lieve we must avoid new buy­ing-in un­der pub­lic in­ter­ven­tion next year, with­out due mar­ket jus­ti­fi­ca­tion,” said the Com­mis­sioner.

Fu­tures prices have fallen due to ex­pec­ta­tions that when the EU’s in­ter­ven­tion buy­ing re-opens in March 2018, it will not put a floor un­der the mar­ket.

EU milk de­liv­er­ies grew 3% in Au­gust, the third monthly in­crease in a row, and Mr Ho­gan warned farm­ers to “keep their heads cool and not over-re­act to in­creased milk prices”.

“No­body wants to go through a dif­fi­cult over­sup­ply sit­u­a­tion again next year, “said Mr Ho­gan. Ire­land, Poland and Italy lead the milk in­creases, but growth is also now hap­pen­ing in big­ger pro­duc­ers such as Ger­many, France and the Nether­lands.

The EU’s third largest pro­ducer, the UK, is head­ing to­wards a 2% in­crease in milk pro­duc­tion this year so far. In a bit of bet­ter news for global dairy mar­kets, an­nu­alised milk growth has slowed to 1% in the US, com­pared to 2% in re­cent years.

C o m m is s i o n er P h i l H o g a n : warned dairy farm­ers to “keep their heads cool and not over­re­act to in­creased milk prices”.

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