While analysts suggested the results were encouraging for global dairy markets, United Kingdom industry experts urged caution on the prospect of significant price recovery before the New Year.
Dairy industry analyst Chris Walkland said the auction results were encouraging for the industry, particularly skimmed milk powder which could affect UK prices.
Skimmed milk powder prices increased 17% at the auction.
“I would say recovery is starting.
“Fonterra has pulled some product off the auction for later in the year.
“With Fonterra cutting milk supply projections and continued noises about El Nino, that would mean we are moving forward.”
Rabobank dairy analyst Kevin Bellamy said the 16.5% jump might reflect more closely what was happening on New Zealand markets, especially milk
production being revised down for 2015-16.
“Our view is NZ supply could go down 8-10% and that will come at the end of the NZ production season.
“We still do not think, given the underlying fundamentals, prices will rapidly increase.
“Futures will start to move as the rest of the year goes on and we may see some positive farm prices after that.”
But Nuffield scholar Ian Pye, who studied global dairying and milks 120 cows near Preston, Lancashire, said he believed the industry was a long way from recovery.
“Everyone seems to have made good quality silage so cows will probably milk reasonably well,” he said.
“There will be a lot of milk about and a hangover from the past 12 months.”
However, a reasonable harvest might mean costs could benefit in the next few months.
Crisis-hit dairy farmers have staged protests throughout Europe in recent months.
European Union relief details showed UK farmers would receive about £26.4 million under the aid package agreed this month, with a significant proportion going to the dairy sector.
Speaking from this year’s UK Dairy Day, Dodd and Co accounting partnere Rob Hitch, one of the leading figures behind Agrihive UK, which aims to spark a business-led debate about dairying, said the GDT movement was a positive sign.
“The UK does not have a lot of exposure to the GDT but it would be nice to think price improvement will filter through,” he said.
A Dairy UK spokesman said tariff and non-tariff barriers were hindering UK dairy exports.
“We need more trade agreements with countries which hold great potential for dairy exports and show a genuine interest in our products,” he said.
UK Farmers Guardian
