Lower operating profit predicted by Glanbia as global product price weakens and milk price lags behind
In this week’s interim management statement, the group said international demand for dairy products remained solid in the first three months of the year, supported by demand from developing economies. But prices for most dairy categories have weakened year to date, mainly due to an oversupply of milk resulting from sustained good weather in most milk producing regions.
According to the Dutch Dairy Board’s latest market analysis, international prices for dairy products remain well above historical averages.
It blames milk price cuts in Europe on increases in milk production and lagging export demand, and predicts subdued milk prices until surplus supplies are worked through — which will be highly dependent on northern hemisphere production trends in the coming months.
But overall demand for dairy products is described as “sound”, and is forecast to continue to grow, especially in developing nations.
The Dutch Dairy Board’s milk price report for March deliveries to 16 major EU processors showed the price average at €33.71 per 100 kg of standard milk.
Ireland is represented by Glanbia and Kerry, both reporting above average prices, of 3391 and 3382 respectively. But their rolling 12 month averages of 3429 and 3382 lagged behind the EU average of 3525.
The price survey is standardised at 4.2% fat, 3.4% protein, VAT-excluded for a 500,000kg per year delivery, of TBC 24,999 and SCC 249,999, collected every other day.
