The country's two largest farming organisations have said that improved dairy markets should be reflected in better milk prices over the coming months.
Boosted by the poor weather conditions in Europe this spring, dairy markets are continuing to improve and should translate into positive returns to dairy farmers in the coming months, according to ICMSA dairy chairman, Gerald Quain.
Co-ops are due to meet to decide May prices and said Mr Quain: “The next round of co-op price announcements need to signal a movement towards positive steps on milk price and the basis for reductions is completely gone at this stage.”
Meanwhile, IFA national dairy chairman Tom Phelan said co-op boards must leverage the improved market returns of the last number of weeks to ensure that, at the very minimum, that the totality of the April payout - base price plus support - is maintained for May milk supplies.
“Both Arla and Friesland Campina last week announced June milk price increases. Arla increased by 1c/kg, which translated into a 1.15ppl increase for UK supplier members, while Friesland Campina upped their ‘guaranteed’ price by 0.25c/kg. FC has stated that it expected European milk purchasers to increase prices further,” said Mr Phelan.
The ICMSA's Mr Quain said that his association thought the increased demand for SMP from intervention and the lack of any negative impact on price was quite significant.
“We expect that the positive market sentiment will continue and we can’t see any reason why dairy farmers cannot receive better prices in the next number of months to make up for the very expensive spring period,” he said.
Mr Quain said that the speculation that the European Commission was ready to move to two sales of SMP each month show the renewed interest and demand within the market for dairy products resulting from spring peak failing to hit the production highs expected. Dutch Dairy Quotes spot prices continued to improve last week with the butter/SMP mix returning 37.2cpl after processing and including VAT, while WMP returned 32.1cpl using the same format with butter prices in particular moving ahead in the last number of weeks.
“Market returns have been increasing steadily in the last few months, and now underpin solidly the prices currently being paid by Irish co-ops, with real scope for improvements,” said Mr Phelan.
“Using only the SMP/butter combination, we see that the most recent EU spot quotes and market average reported prices would return between 33.21c/l and 36.31c/l + VAT, he said.
Last week's GDT auction, which saw a weighted average price reduction of 1.3 per cent, would yield an SMP/butter price equivalent of 31.40c/l + VAT, he said.
“Dairy farms have only in the last month started to experience some relief from the dreadful fodder shortage and financial pressures following an eight-month winter. Co-ops must take the real opportunity afforded by improved markets to maintain their April payout for May milk, and then leverage the continuing improvements to return correspondingly improved milk prices,” said Mr Phelan.