Dairy product markets volatile due to increased milk production and the effect of high prices

DAIRY product markets remain volatile, according to sources at Glanbia, who point to increased milk production, the effect of high prices on demand, and dollar weakness as the factors hitting supply and demand. Year-on-year milk production increases, at 2% across the EU and the US, are adding to supply.

Butter exports are low, and a massive increase will be needed in the second half of the year to balance the market. After a sharp decrease in EU prices, the situation had been stabilised by record intake into the private storage aid (PSA) scheme. Due to the flush of milk, skim milk powder markets had declined, pushing product onto non-EU markets at lower prices. A modest price increase is expected in the second half of the year. Whole milk powder markets have stabilised. Pressure on prices due to dollar weakness continues, but medium term prospects are “reasonable,” says Glanbia. Cheese markets have settled after a sharp decline.