Milk price to remain at 30-32c/l predicts Ornua

MILK PRICES look set to remain at 3032c/l over the coming months, despite Brexit and potential weather volatility, according to Ornua.

It is hoping that supply in Europe would stay “constrained” as the summer approaches.

And after over two years in the “doldrums”, the price of skim milk powder has improved.

“Intervention stocks have cleared down,” said Joe Collins, managing director of Ornua’s dairy trading and ingredients division.

He said it was likely more SMP would be produced going forward, with the dairy trade in the 30-32c/l range including VAT in the coming months.

“The volatility is still there across all products and those weather events are adding to it,” he said. Mr Collins said they were keeping a close watch after the first quarter of the year with a slowing global GDP, Brexit and trade wars.

Signals

He added that there were some “mixed signals” from the marketplace with the New Zealand Global Dairy Trade index figures higher while some European quotes were lower.

The latest Global Dairy Trade auction is up 6.7pc with all major products showing big gains. The prices on ‘spot’ milk markets have improved with the Dutch dairy quotes running over 5pc higher for butter than this time last month, WMP increased by 6pc and SMP increased by almost 8pc.

European milk supplies have been constrained over the last three months, with volumes lower compared with the previous November and December.

Extreme weather events over the past 12 weeks have impacted with record high temperatures in Australia and the US hit by a polar vortex.

The unusually mild weather in Europe will deliver an early spring and “push on milk,” said Mr Collins.

The Ornua Index for January 2019 is 107.6 or 32.2c/l including VAT.

The ICMSA’s dairy chair Ger Quain said that based on the rapidly strengthening dairy markets, he expected all co-ops and processors to pay suppliers a price “at least equal to the PPI’s 32c/l.

He said this would send a positive signal to farmers that 2019 will be a stronger year in terms of milk price.

“The co-ops are well aware of the higher input trading bills being carried forward, so they know the level of pressure,” said Mr Quain. Similarly, the IFA’s dairy chair Tom Phelan said co-ops must, at the very least, maintain base milk prices.