Tipperary farming: ICMSA ‘adamant’ milk prices should be maintained

Dairy markets have continued improving into the new year confirming the positive trend that ran throughout December 2018, according to the ICMSA.

The association’s dairy committee chairperson Gerald Quain has indicated that the organisation expects the significant upward trend to result in a rise in farmer milk price.

ICMSA was very critical of the processors who cut the November milk price in defiance of what the farm organisation said were a raft of positive market developments and a PPI that did not justify a price cut.

Mr Quain was adamant that the last two GDTs signalled a positive turn.

He noted that Dutch dairy quotations had continued to move upwards with powders performing well on the back of what he described as “an extraordinary” demand for SMP from EU Intervention stocks.

“The strong sales out of intervention are, we think, very significant for dairy markets as we set off into 2019. The stock overhang of SMP has been massively reduced with over 270,000 tonnes sold out of Intervention in 2018”, he said.

Looking at markets in detail, the 2.8 per cent increase in the most recent GDT auction was achieved by increases in all products sold with butter up 3.9 per cent, SMP increasing 7.9 per cent and WMP achieving 1.2 per cent gains.

These improvements in the GDT occurred after falls over the course of 2018 but, more importantly, they came at a time where New Zealand had increased milk supply over their production season, he said.

Mr Quain said that Dutch dairy quotes for butter were holding strong having slipped from their highs of late summer, but they remained at a historically high level around €4,000.

“The critical change is in the value of SMP where quotes have risen to their highest prices since mid-2017, while WMP has also seen improvements in the last six weeks to counteract falls in the autumn,” said the dairy chairperson.

Milk supplies within the EU had seen collections in October 2018 0.4 per cent below October 2017, resulting in 52,000 tonnes less milk produced and with 2019 EU production expected to only marginally increase by less than 1 per cent, ICMSA’s expectation was that this, along with fodder supply uncertainty across the continent, will mean that buyers were a little more anxious to secure supply and that should feed-back by the end of Q1 into a higher farmer milk price, said Mr Quain.

While waiting for the prices to feed back to the farmer suppliers, Mr Quain called on processors to hold milk prices at least for the first quarter of 2019 and then review the market in light of supply and demand developments at that stage.

He said that ICMSA would be confident that by then it will be obvious that a price rise is justified but, in the meantime, cannot see why processors would even consider not holding price.

“We’d be extremely angry if they weren’t willing to wait the few weeks until the market data confirms absolutely what’s already obvious – markets are moving upwards and prices will follow,” said Mr Quain.