Dairy market volatility as milk supplies remain tight
Dairy market volatility saw future butter prices rise sharply last week, while Dairygold announced it has cut back its cheese production due to reduced milk volumes.
In a statement, Dairygold said due to milk volumes being 9pc lower than 2023 in the year to date and the outlook for the year to be around 7pc lower, it will reduce cheese production over the summer months and allocate milk volumes elsewhere within the company as it looks to optimise its processing capacity and consider individual product returns.
Dairy markets in Europe saw a surge in future butter prices last week, jumping from €5,600/t to €6,500/t.
One analyst said the price rise was due to a shortfall in milk supplies across Europe over the past few months, coupled with increased exports, with butter stocks reported as “extremely low” after the UK and Ireland produced just 173,000t of butter between October and March, back from its usual volume of nearly 200,000t.
March and April EU milk volumes have been reported as variable across Europe, with recent reports of total volume plateaus, according to the AHDB.
New Zealand milk volumes are back 3.47pc compared to March 2023, while the latest New Zealand-based Global Dairy Trade earlier this month was up 1.8pc, with cheddar cheese seeing the biggest percentage price rise, up 7pc.
Irish milk volumes were down 5.9pc in March compared to last year after a difficult few months of weather conditions for dairy farmers.
ICMSA Dairy Committee Chair Noel Murphy said milk supplies globally are back by 0.9pc, which he noted was a greater margin than 2022, when milk price increased to 56c/L.
“Typically, when dairy markets move forward, the standard industry ‘mix’ of butter and SMP moves first before other products,” he said.
“Hopefully, we’ll see a significant move on dairy prices upwards in the coming weeks that will catch the last period of ‘peak production’ and enable milk suppliers to avail of the higher prices during this crucial period.”
A spokesperson for IFA said supply here has been severely impacted in the early part of year due to the very difficult weather conditions, but the market outlook here and across Europe for the short term is stable, with positive signs for the second half of the year.
“A strong milk price is vital for dairy farmers who are absorbing significant costs arising from the adverse weather and the late spring,” they said.
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