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Milk Production Responding to Low Prices

13 July 2016

GLOBAL - There are now solid signs that milk production is slowly responding to lower prices, according to the Irish Co-operative Organisation Society (ICOS).

The European Commission presenting data at the recent meeting of the European Milk Market Observatory, attended by ICOS, whereby they predicted a modest milk supply increase of 1.4 per cent in the EU this year.

This figure takes into account a 5 per cent predicted increase in Ireland, a 5.5 per cent increase in the Netherlands, a 3 per cent increase in Poland, and a 1.5 per cent increase in Germany. These levels of growth are countered by zero growth in France and a 2 per cent reduction in UK supplies.

At a global level, ICOS said the FAO is forecasting 1.6 per cent milk supply growth; consisting of US expected growth of 1.9 per cent and New Zealand and Australia expecting to reduce supply across the calendar year by 2-5 per cent.

This week’s Eurex butter index was up to €3160, an almost 30 per cent increase on the March low of €2440. The SMP index has also risen, this time up 7 per cent from the March low, currently quoted at €1733.

Whilst the positive movement is to be welcomed, that SMP number still places the product in intervention territory, and the combined figures, when translated into milk prices, suggest a milk value of just over 22c per litre.

TheCattleSite News Desk



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