The view from Rabobank New Zealand this week suggests it expects global milk production growth will lift slightly again through to the end of the year, due primarily to low feed grain prices, especially in the US.

In relation to demand from China, the message was that dairy was “still very subdued”, due to higher retail prices, combined with slowing economic and income growth in China.

The positive line reported was Rabobank expects a modest improvement in dairy demand in 2015 – in the vicinity of a 1.5% increase on 2014 – but still well below five-year average rates.

Also on the supply equation, the FAO dairy price index averaged 172.4 points in April, down 12.5 points (6.7%) from March. Milk powders and butter were the main commodities affected.

FAO reports the price weakness affecting the sector reflects a favourable opening to the April to March dairy year in the EU, combined with the abolition of the milk quota system, which raised expectations of abundant export supplies.

Dairy prices were also influenced by uncertainty over the level of China’s purchases during 2015 and continued import prohibitions imposed by the Russian Federation.

Reports from the US suggest dairy margins improved over the last half of April, with a combination of higher milk prices and lower feed costs.

Closer to home, the IFA National Dairy Committee met late last week in Dublin to examine milk prices and the message was “there is no denying that markets have weakened, but some of the commentary focusing on GDT auction results ignore the fact that EU dairy commodity prices have held far better”.

“Late April returns for an Irish product mix, at around 34c/l before processing costs, about match what is being paid by most co-ops,” a spokesperson said.