Ciaran Moran Twitter
Farm organizations held a bumper auction for Global Dairy Trade (GDT) yesterday, saying the result should signal strong Irish milk prices for the coming months.
Prices at the auction rose an average of 15 percentage points, inclusive a rise in prices for whole milk powder by 21 percentage points and a rise in butter prices by 13.7 percentage points.
The price gains at this auction were well above market expectations. The futures market had expected a (still strong) increase of 4 percentage points before the auction, said the New Zealand ASB bank in an analysis.
The result is a particularly dramatic representation of the latest trend that we have seen: Milk prices are rising and the magnitude of profits is exceeding expectations.
« Aggressive purchases fueled by Chinese buyers are likely to affect the result. Inventories in China are not keeping pace with consumption, » it said.
The ASB also emphasized that fears about ship disruptions are the recent trends likely have exacerbated as buyers sought security of supply.
« The event lasted 23 rounds – the longest in our records – and some buyers were not able to get all the products they wanted, » it said.
However, the ASB assumes that the Prices will weaken at least slightly at subsequent auctions, but said “when” and “how much” are big questions.
« The stable futures contract curve is a good sign. Fears of logistical disruptions persist and are motivating buyers to secure supplies for future deliveries in good time in order to meet the expected demand. High prices for the longer-term contract curves are a must encouraging sign that prices will remain up, « it said. The chairman of the ICMSA milk committee said the recent auction put the recent steady increases » in the shadows « and the arguments for farmers to raise prices for February milk overwhelmed.
Ger Quain noted that it also creates a top milk supply to be produced at a strong milk price.
“The dairy markets are currently developing well and this will – as ICMSA has already predicted – result in higher milk prices for farmers and suppliers.
« Butter’s sharp rise of over 13% and WMP’s 21% increase shows where the demand for dairy products in this latest GDT is coming from. This latest data means that 11 of the last 12 results had positive GDT returns September.
« The other point to note is that, while the percentage results are much higher than expected, they are by no means an outlier or » out of sync « with respect to the evolution or direction of the milk price.
« This latest round of results undoubtedly allows for price increases for farmers in the next month and makes them very likely for the months to come, » said Quain.
Stephen Arthur, chairman of IFA Dairy, also said that Cooperatives cannot ignore the trends of the recent GDT auction, which saw a dramatic increase in raw material prices.
“This increase in raw material prices corresponds to a Farmgate price of over 40 c / l for farmers. Movements south of the equator point to a very positive outlook for the milk price for 2021. As we near the peak, we will not tolerate processors downplaying the price. There is a lot of scope for the price of milk to rise in the next few months, ”he said.
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