GDT auction rise boosts hopes of firm milk prices
Yesterday’s GDT dairy auction added to prospects of firm global milk prices, with an overall GDT Price Index rise of 2.8%, including the butter index rising 3.9%, and the skim milk powder index up 7.9%, both good news for the EU’S exporters. After the index fell steadily in 2018, this is the second auction in a row with rising prices.
It provides some reassurance for Irish co-ops thinking about December milk prices, after most of them held the November price unchanged, although Lakeland and Aurivo cut their November milk price.
Dairygold Co-op was one of those to hold the price unchanged, but chief executive Jim Woulfe said before Christmas that dairy market returns had fallen, and the Dairygold portfolio of products was delivering a milk price of around 29.3 cent per litre, falling short of their 32 cent November price. Global dairy market analysts will watch closely in 2019 to see if the $867 billion Farm Bill signed into law by President Donald Trump before Christmas will keep US dairy farmers afloat. It contains a Dairy Margin Protection Programme to guarantee that farmers earn a certain amount for their milk.
If farmers’ earnings drop below a minimum threshold, the government will cover the difference.
US farmers say it may be too late to rescue milk producers, after a year of financial stress in which 600 dairy herds disappeared in Wisconsin, the No 2 milk producing state, with 7% of its dairy farmers giving up. November cow numbers in 50 states totalled 9.36m, down 8,000 from October, and 38,000 in a year, with No 2 milk producer California losing 12,000 cows milked in a year. From the point of view of EU dairy farmers, a slowing dairy industry is a welcome trend in the US, after the US increased its share of global dairy exports in 2018 mostly at the EU’S expense. Falling US milk production and exports would strengthen what is already considered to be a relatively balanced dairy market, with reasonable global production growth and satisfactory demand.
As a result of this favourable market, average EU farm gate milk prices improved for five months up to October, and relatively firm prices are expected for the coming months.
Combined world milk production has increased only about 1.3% in 2018, and slowing US growth would counterbalance soaring New Zealand production.
EU milk production is also slow, and could slow further if farmers run out of fodder this spring. Combined global exports are above 2017 levels since July. Demand for cheese is solid, but competition is strong notably from the US. The global butter trade is increasing modestly, with EU exports declining because of uncompetitive prices. Ukraine has emerged as a prominent butter exporter. Skim milk powder trading is expanding, driven by low world prices. EU skim remains the most competitive. Global demand for dairy products is still growing, but subject to uncertainty caused by trade wars and Brexit, the weaker economic outlook in some areas, falling oil prices, and political and regulatory issues in some Middle East and North Africa countries.
The Crowley family from Lissarda Co Cork took home the top award for reduced carbon footprint in the dairy category when winners in the Bord Bia Origin Green Farmer Awards were recently announced, honouring Ireland’s most sustainable, efficient and environmentally friendly family farms. Bord Bia CEO Tara Mccarthy, left, and Chairman Dan Macsweeney, right, presented the award to Trevor and Olive Crowley.
At the recent Bandon Co-op Winter Dairy Seminar, John and Tim Crowley, Careys Cross and Denis Crowley, Bandon.