Dairy processors have been urged to hold their current milk prices through the peak supply season.

IFA National Dairy Committee chair Sean O’Leary said the announcement by Ornua (formerly the Irish Dairy Board) that its Purchase Price Index (PPI) for March was at 100 points, 2.5 points up on February, “should help firm co-ops’ resolve to hold price through peak despite recent weaknesses in global dairy markets”.

“A PPI of 100 points is equivalent to a VAT-inclusive price of nearly 31c/l, which is slightly above what most co-ops pay at the moment,” O’Leary said.

Meanwhile, the weekly Dutch Dairy Board quotes showed falls of between 2% and 5% across the commodities on Wednesday, reflecting the hit delivered to market confidence by last week’s 10.8% GDT auction price fall.

O’Leary said the current weakness on dairy markets relates to uncertainty around EU milk production post-milk quota abolition.

“I agree with the EU Commission’s analysis that 2015 milk output will only increase by 1% (as against 4.5% last year). I do not believe that we will see a big increase in EU production over the coming months. Most member states could only do so by feeding additional expensive feed, at a time when low milk prices mean farmers are barely breaking even in most regions.”