Global demand for dairy is likely to be back 5% to 10% this year, according to Irish dairy exporter Ornua.

Speaking to the Irish Farmers Journal this week, Ornua’s head of risk management Colin Kelly painted a complex picture of international dairy markets right now, but said overall demand is likely to be back 5% to 10% this year.

Kelly said COVID-19 was having a major impact on markets. On the positive side, COVID-19 had resulted in a surge in demand for dairy products such as butter, milk and cheese sold into retail channels. The pandemic had also forced many large dairy importers such as China to start stockpiling large volumes of dairy product in anticipation of a second or third wave of COVID-19.

However, Kelly said the negatives outweighed the positives. While the current stockpiling was supporting dairy prices, Kelly warned of the possible impact this could have on demand early next year.

He said the loss of food service had also been damaging to dairy markets. And while most food service companies were now reopened for business, the level of buying has slowed to a stop-start fashion as a result of rolling lockdowns around the world.

At the same time, Kelly said the collapse in the oil price had significantly weakened demand from oil dependent economies in north Africa and the Middle East. Overall, Kelly said Irish farmgate milk prices should hold steady into the autumn, but warned that market conditions could be difficult by December or early 2021.