Milk prices must reflect bullish markets
Wednesday, 16 January, 2019
Ulster Farmers' Union, dairy chairman, William Irvine has called for local processors to recognise strengthening markets for dairy products and to pay a price that reflects what is happening on commodity markets.
“The time has come for processors to step up to the mark when setting base prices. The New Zealand Global Dairy Trade (GDT) auction has delivered its fourth consecutive price increase. We have also seen an increase in the ZuivelNL/Dutch Dairy Board index. The market has strengthened so there is no reason why farmers here shouldn’t see that reflected in their milk cheque,” said Mr Irvine, adding that this upward trend is also evident on key dairy futures markets.
Market sentiments have moved up with the big reduction in stocks in EU skimmed milk powder (SMP) intervention stores. The European Commission sold over 80,000 tonnes at the first trading event of 2019, leaving stocks of around 22,000 tonnes. This contrasts with a peak of over 370,000 tonnes. “With this overhang on the market gone, this should improve the price for fresh SMP,” said Mr Irvine. But he warned of concern over signs of an unwelcome January trend emerging over prices. “Seasonal bonuses, which have nothing to do with market sentiment, are seemingly being used to hide true and justified increases in base prices,” said the UFU dairy chairman.