The outlook for milk price remains largely positive, despite recent cuts by Irish co-ops.
Richard Schepers of Dutch-based dairy commodity trader Farmel foresaw no major changes in farmgate milk prices in the medium term.
However, he cautioned that global markets were weaker.
“Sentiment in the dairy markets has turned more bearish over the summer months on the back of a relatively strong milk supply for this time of the year and sluggish demand,” Schepers said.
And although these developments had resulted in an “overall weakening” of what Schepers termed “the market balance”, he maintained that “a modest correction in milk prices for the months ahead” was the most likely outcome for farmers.
Milk powder
“On the protein side, skim milk powder markets are struggling, with the volatile and expensive euro against the US dollar making exports less competitive and uncertain,” Schepers said.
“On the milk-fat side, data indicates that butter stock levels have improved year-to-date and year-on-year on the back of higher production volumes and weaker exports,” he added.
Over the last two months, Dutch spot prices for butter have fallen by €400/t, but remain very high at around €7,000/t. The market for skim milk powder has been steadier, holding at around €2,350/t.
“Dairy markets have been very quiet in recent weeks – not too unusual for the peak summer months, especially in Europe – so I think the next few weeks will bring more clarity on where sentiment is at,” said Margaret Butler, dairy sector manager at Bord Bia.
Lakeland Dairies, Dairygold and Kerry Dairy Ireland reduced their base milk prices this month by 1c/l, with Tirlán cutting its base by 0.5c/l.
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