James Lynch has said that SMP in intervention and growing milk supplies must be watched carefully.
Dairygold chair James Lynch has called for caution on milk price expectations among farmers as long as there is 350,000t of product SMP in intervention and supplies are growing.
“I think it’s steady as she goes at the moment, [we are] concerned about milk price where it is and being able to maintain it, but at same time conscious that we need to maintain a strong return to our farmers because they’re after coming out of a very difficult two-year period,” Lynch told the Irish Farmers Journal.
“In the short to medium term, it will be all about trying to maintain milk price where you are at the moment and hold it at that.”
Lynch said that the 350,000t of intervention SMP is overhanging the market and causing uncertainty.
“To be fair, the EU has handled it well, put a price on it and held that price, they haven’t dropped it and put further pressure on dairy markets,” he said, noting that the EU as a whole and the UK was showing very strong signs of milk supply, while the effect of the Dutch cull remained to be seen.
“You see what’s going on in the US, they are still growing at a very substantial rate, we have the issue of Brexit hanging over us here, you have New Zealand forecasting a very strong price for next year. With all that happening, that is only signalling one thing: a lot of milk production coming at you again.
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“We’re after coming through a period where we saw seven consecutive rises in the GDT through the back end of last year. We saw it again in January. In the meantime, the volumes of milk have grown at a very strong rate out of the EU countries and out of New Zealand,” he added.
“We had a GDT on Tuesday (18 April) which I took a bit of comfort from that it was starting to show stabilisation.”
Lynch said markets would need to improve and recover to take milk price paid to farmers on further for the remainder of the year.
“The expectation from here to year end will depend on what kind of volume comes out of New Zealand between this and the close down of their season and you’re also going to be monitoring very closely the volumes of recovery that has come out of the EU,” he said.