GDT auc­tion rise boosts hopes of firm milk prices

Irish Examiner - Farming - - NEWS - Stephen Cado­gan

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.

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