As dairy farmers begin to plan for 2021, what can they reasonably expect in terms of an average milk price this year? The reality is this is a very difficult question to answer right now. There’s always a degree of crystal ball gazing when it comes to predicting future milk prices, but the uncertainty and disruption caused by COVID-19 has made market forecasting for the year ahead incredibly difficult.
When COVID-19 first hit global dairy markets in April last year, prices plunged to their lowest levels since the financial crisis. At that time, few could have predicted the resurgence we’ve seen in the second half of 2020.
As we stand right now, dairy commodity prices for butter, cheese and milk powders are in a decent position, which would equate to a milk price in the region of 30c/l or higher. However, while dairy demand has recovered, it remains fragile in many important markets and milk supply is rising in some large producing regions.
US milk production hit a record level in 2020, while New Zealand milk supply is running about 1% ahead of last year. The spring flush in Europe is going to have a major bearing this year on dairy market sentiment.
If supply is subdued in Germany, France and the Netherlands in the opening quarter of 2021, then Irish farmers can hope for better milk prices this April, May and June during the year’s key production months.