Milk price strengthens on the back of global demand

FURTHER increases in milk prices could be on the cards as global dairy markets remain strong.

Local industry sources conceded that prices for July supplies are likely to harden further on the back of continuing buoyant international demand.

“Right now there is nothing out there that will radically change matters, so we are looking towards a further improvement in milk prices,” one processor source said.

Although the GDT index fell back 1.6pc last week, the overall tone of international dairy markets remains positive.

Industry analysts point out that milk supply and demand remain in balance, with output in Europe remain static, while supply growth in the US and New Zealand is being absorbed by increased American domestic demand and heightened Chinese buyer activity respectively.

Meanwhile, ICMSA has urged dairies to close the gap that exists between Irish milk processors and their European counterparts.

While most Irish processors are working off of a base of 33-34c/l, Gerald Quain of ICMSA pointed out that Ireland lagged behind the EU average milk price by 1.6c/kg.

The ICMSA representative said there was no justification for the price gap and he rejected what he described as the “carefully cultivated notion” that the lag between Irish and European prices had been closed.

“The Irish milk price is still in 14 th place at EU level, a position which — when you consider our investments at processing level and our grass-based natural system of milk production — is very disappointing,” Mr Quain said.

“As of May, the EU average was still 1.6c/kg above our figure. That difference translates to almost €5,000 over a year for a 300,000-litre dairy farmer,” he pointed out.