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“This is a fragile environment, depending on supply reductions to keep price up.”
This was the stark message Dairygold chief executive Jim Woulfe delivered as the co-op announced 2016 profits were down 9% at €17.5m and it had supported milk prices by €25m.
Despite milk prices being up almost 10c/l compared with this time last year, he said the industry needs to remain cautious. The big driver of the recovery to date has been supply curtailment, driven by an ease back in New Zealand, South America and Europe according to Woulfe. However, he warns this is not a very sound basis, preferring to see an increase in demand.
He said the intervention overhang is not helping and buyers are staying back from the protein side of the market.
“In the last six weeks there has been a recovery in the supply side, across Europe, New Zealand and the US.”
Listen to "Talking performance and price recovery with CEO of Dairygold" on Spreaker.
He believes full visibility will not be seen until quarter three, when the southern hemisphere comes back on stream.
Woulfe said that given the major processors in the southern hemisphere are still talking about a forecasted price in excess of $6/kg, this will probably stimulate supply and affect milk price in the second half of the year.
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