All ‘eyes’ on management committee
News on Thursday of the EU’s second sale of dairy intervention stocks will have a big bearing on markets.
Intervention releases halted recent rapid market price rises for dairy commodities, although EU Agriculture Commissioner, Dacian Ciolos, has said the release of stocks will be managed so as not to endanger the gradual recovery of the market in recent months.
After the recent intervention sale, Irish dairy co-ops welcomed the rejection of all tenders for skim milk powder, because offers were below the market average price.
But ICOS president, Pat McLoughlin, said the EU allowed the sale of too much butter at too high a price.
Falling milk powder prices in the June online auction by Fonterra, which accounts for about 40% of world trade in dairy products, reflected market instability.
The weaker price was blamed on the EU, the world’s biggest milk producer, approaching the peak of its output cycle. This coincides with the euro slumping to a four-year low against the US dollar, which has made EU milk powder more competitive on the world market.
EU retail sales falling sharply in April are also linked to the euro crisis, causing consumer uncertainty over jobs and government spending — which could hit dairy sales in the EU, and eventually in major markets, such as China, whose economic fortunes are linked to the EU.
The retail slump may affect the dairy industry less in Ireland than in other EU member states.
Already in April, Irish co-ops were paying near to the EU average for milk, and it was dairy farmers in the Continental member states who were hurting, the European Milk Board giving away thousands of litres of milk last week in protest against what they saw as poor market prospects.
At the same time, the May milk price in Ireland was rising to 30 cent, paid by co-ops such as Kerry Group and Town of Monaghan, the new benchmark price, according to ICMSA.
