Co-ops are set to meet this week to decide on milk prices for March supplies.
While there are concerns over skimmed milk powder (SMP) intervention stocks; the EU Commissioner for Agriculture, Phil Hogan, has made it clear he is determined not to sell, except ‘at the right price’, O’Leary said.
There were clear indications that 2017 would see only very modest volume increases and that dairy prices would remain mostly stable at relatively strong levels, he added.
O’Leary believes this must strengthen co-ops’ resolve to up prices further and deliver at least 33c/L before peak.
This would allow Irish milk producers to re-build their balance sheets as well as to clear out merchant credit and other short-term debt, he said.
“In its first Dairy Quarterly Report for 2017; Rabobank sees continued strong demand for butterfat, accompanied with high prices.
“China is expected to increase imports by 20% (milk equivalent) to replenish depleted stocks, which will sustain balanced whole milk powder (WMP) markets.
“Despite the high intervention stock, and its re-opening for the purchase of 472t from Poland in late March, spot quotes for SMP last week were stabilising just above intervention buy-in price.
“Dairy markets are actually historically strong,” he explained.
“With milk volumes still below the year prior, we have yet to see the production growth expected from improved milk prices anywhere – bar in the US.
“In New Zealand, where February statistics suggested a recovery in production, last week’s cyclone Debbie and ensuing floods are predicted to damage pastures, increase feed costs and could put a damper on output for the new 2017-2018 season.
“Irish dairy farmers must be able to capitalise on it with their peak milk and I urge all co-op board members to put a plan in place to lift milk prices further, starting with March milk,” O’Leary concluded.