“The markets just don’t know which way to jump at the present time,” she said.
“Butter stocks are at almost record low levels. The exact opposite state of affairs is the case for skimmed milk powders, while cheese prospects look steady.
“All of this is predicated on production trends remaining within predictable parameters. But the recent floods in New Zealand may change this scenario significantly,” she added.
Meanwhile, milk production from the five main exporting regions – EU, USA, New Zealand, Argentina and Australia – rose again in February, continuing the month-on-month growth seen since October 2016. Combined production in February was just under 22 billion litres, equivalent to around 279 billion litres on an ‘annual equivalent’ basis.
The US continues to be the main contributor to the rise in milk supplies, although New Zealand (NZ) turned a corner in February – recording growth for the first time since its peak production period in September of last year.
Production in the EU-28 has been steadily rising in recent months and is therefore not offsetting the growth seen elsewhere – as much as it was.
The outlook for 2017 anticipates combined growth of 1% from the five key regions, equivalent to a further 3.5 billion litres of milk over the year. Again, the US will supply of this, as herds and yields are expected to rise – leading to a further 2.2% uplift in production. The EU-28 should start to see deliveries rising during the second half of 2017, resulting in net growth of 0.5% for the year.
She said that demand is the other factor that must be taken into consideration, when assessing the tone of international milk markets – moving forward.
Stocks of dairy products must also be factored into this equation. And in this context, the very significant tonnages of skimmed milk powder in EU intervention stores must be fully accounted for.
Meanwhile, the IFA’s National Dairy Committee Chairman, Sean O’Leary, believes that Ireland’s co-ops must focus on increasing milk prices before peak, in order to deliver the 33c/L average some industry leaders have predicted for 2017.