ICMSA optimistic of milk price rise as demand at auction improves

THE Irish Creamery Milk Suppliers Association has expressed renewed optimism on milk price prospects for the back end of this year.

It followed a recovery in Fonterra Co-op milk auction powder prices by on average 16.9% and by as much as 24.9% after slumping in previous months.

Fonterra, the world’s biggest dairy exporter, based in Auckland, New Zealand, accounts for about 40% of global trade in butter, milk powder and cheese, selling $12 billion (€9.3bn) of products a year in 140 countries.

It said international milk prices rose for the first time in five months at its latest auction, as demand improved.

The result appeared to indicate a firmer tone has returned to the market in the last month despite a series of warnings from banks and dairy companies that prices are likely to soften in late 2010.

Arla, the Danish dairy co-operative, warned this week that it faced a “challenging autumn“, largely because of weaker milk price prospects.

But ICMSA Dairy Committee chairman Pat McCormack said the Fonterra result was very welcome news for dairy farmers and the dairy sector in general.

The reductions recorded in the July and August auctions have been fully recovered and it should form the basis for continued optimism on milk price prospects for the back end of this year.

Mr McCormack said that while the butter market remained stable at a high level over the summer, there had been some weakness in the powder markets in recent months.

But this auction result provides evidence that powder markets are improving and there appears to be renewed demand. “In that context, and as ICMSA has already stated, co-ops have the ability to pay a higher price for milk,” he said.

Mr McCormack called on all co-op boards to raise their August milk price to reflect the true returns from the marketplace.

“Dairy farmers are still only recovering from the horrors of 2009 and need every cent to clear outstanding debts and to bring financial stability back into their business.

“It is nothing less than the duty of co-ops that have the ability to pay a higher milk price based on market returns to do so,” he said.


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