We received plenty of feedback from farmers and milk processors after our recent article on milk markets. The article detailed reasons why milk market sentiment is more positive now than it was prior to Christmas.
Given the positive milk price headline on the article, the general consensus from the processors to me was – tongue in cheek – they were willing to give me a trading licence and some product and send me out to the market to secure sales. The message was if you think the markets are good, go and show us how to do it.
The farmers who spoke to me after reading the article were wondering where all the negative sentiments from co-op management were coming from if the barometers are showing more upside movement at the moment.
The GDT auction results this week further helped cement the positive mood. The New Zealand auction results lifted 6% on the back of two previous positive rises so cumulatively results are up over 13% from six weeks ago.
There is no doubt the lower milk production figures from New Zealand are driving this positive sentiment. While the milk traders will suggest milk production in New Zealand is up on last year, which it is, the trend in production over the last five years is different.
In Figure 1, I’ve pulled out the milk supplied for the four peak months in New Zealand (September to December) and I’ve shown the trend during this period over the last five years. Essentially it shows production peaked in 2014/2015 at 11,900,000t (over half the total annual production) and dropped to 11,490,000t in 2015/2016, and a further drop to 11,140,000t in 2016/2017. The most recent numbers show that 2017/2018 production is up at 11,230,000t, but when you put this is context it’s still well short of peak production closer to 12,000,000t in 2014/2015. So we have had rising global demand for dairy product but falling production for the last three years from the largest exporting nation of dairy product.
The low spot price for milk now was also mentioned as a reason why Irish milk price will have to come down. Yes spot price is low (January 24.4c/l) but again it is up on the December spot price which was 20.5c/l. To qualify the barometer, the Dutch spot price is not a good indicator of markets.
The other piece that came up in conversation was the US production was rolling well and again this is true. Milk production is up 14% over the last 10 years. Thankfully not as much US milk is exported as most of it is consumed within the US. Interestingly, US cow numbers are now about the same as they were in 2008. During the last milk price crash cow numbers crashed and have steadily increased from 2010 to 2016.
While New Zealand milk supply is up relative to previous year annual production is still well down from three years ago.Dutch spot price is low but rising and generally regarded as a poor indicator of dairy markets.US milk production has increased 14% over last 10 years.
We received plenty of feedback from farmers and milk processors after our recent article on milk markets. The article detailed reasons why milk market sentiment is more positive now than it was prior to Christmas.
Given the positive milk price headline on the article, the general consensus from the processors to me was – tongue in cheek – they were willing to give me a trading licence and some product and send me out to the market to secure sales. The message was if you think the markets are good, go and show us how to do it.
The farmers who spoke to me after reading the article were wondering where all the negative sentiments from co-op management were coming from if the barometers are showing more upside movement at the moment.
The GDT auction results this week further helped cement the positive mood. The New Zealand auction results lifted 6% on the back of two previous positive rises so cumulatively results are up over 13% from six weeks ago.
There is no doubt the lower milk production figures from New Zealand are driving this positive sentiment. While the milk traders will suggest milk production in New Zealand is up on last year, which it is, the trend in production over the last five years is different.
In Figure 1, I’ve pulled out the milk supplied for the four peak months in New Zealand (September to December) and I’ve shown the trend during this period over the last five years. Essentially it shows production peaked in 2014/2015 at 11,900,000t (over half the total annual production) and dropped to 11,490,000t in 2015/2016, and a further drop to 11,140,000t in 2016/2017. The most recent numbers show that 2017/2018 production is up at 11,230,000t, but when you put this is context it’s still well short of peak production closer to 12,000,000t in 2014/2015. So we have had rising global demand for dairy product but falling production for the last three years from the largest exporting nation of dairy product.
The low spot price for milk now was also mentioned as a reason why Irish milk price will have to come down. Yes spot price is low (January 24.4c/l) but again it is up on the December spot price which was 20.5c/l. To qualify the barometer, the Dutch spot price is not a good indicator of markets.
The other piece that came up in conversation was the US production was rolling well and again this is true. Milk production is up 14% over the last 10 years. Thankfully not as much US milk is exported as most of it is consumed within the US. Interestingly, US cow numbers are now about the same as they were in 2008. During the last milk price crash cow numbers crashed and have steadily increased from 2010 to 2016.
While New Zealand milk supply is up relative to previous year annual production is still well down from three years ago.Dutch spot price is low but rising and generally regarded as a poor indicator of dairy markets.US milk production has increased 14% over last 10 years. 
This is a subscriber-only article
SHARING OPTIONS: