Milk prices are unlikely to recover until the second half of next year, the Irish Creamery Milk Suppliers Association (ICMSA) annual general meeting (AGM) in Limerick heard on Friday 28 November.

There was consensus among the participants on a dairy prices panel that the continuing growth in global milk output will have to slow or halt - and may even have to be reversed - before milk prices stabilise.

However, the panel differed on the likely speed and extent of the market correction that farmers could expect.

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Ornua economist Ciaran Aylward said the sentiment in dairy markets remained “weak” and he warned that a further “easing” in commodity prices was likely in the medium term as producers were keen to reduce stock levels before the year end.

However, Aylward pointed out that European dairy commodity prices have “come back in line with global historic levels” and the rate of decline had slowed.

Lower prices

He predicted that lower farmgate milk prices would feed into lower European production in 2026 and that this could feed into a slight recovery in the second half of 2026.

Aylward forecast that European milk output could grow by 1% in the first half of 2026 and fall by 2% in the back end of the year.

“Overall, I’d expect pricing to remain flat at current levels until Q1, and hopefully start to see some improvements in Q2 and Q3,” he said.

But he cautioned that prices were “unlikely to come back to the levels that we saw in the first half of this year”.

Aylward’s views were shared by managing director of international financial services company StoneX Liam Fenton.

He said buyers were already indicating that they were willing to pay up to €5,500/t for butter next year, well above the current price of €4,700/t.

Although Fenton told the AGM that milk price uncertainty was “here to stay”, he forecast that markets would stabilise and improve in 2026.

However, Nick Holt-Martyn of the UK-based Dairy Group challenged the positivity of the other speakers.

Using the Superman analogy, he told the audience that increased supply was like “kryptonite” for milk prices and markets would not settle or recover without a sharp reduction in milk output.

“We need milk supply not only to slow down but to go backwards. The sooner the growth in milk supplies goes back to zero the sooner milk prices can start to recover,” Holt-Martyn maintained.

The Dairy Group consultant said there was no slowdown in European milk output and pointed out that volumes across the continent had increased 4.9% in September.

He said supplies in Britain were also at record levels and that the “market was unable to cope”.

Holt-Martyn maintained that the current price squeeze could result in the number of Britain’s milk producers falling from the current 7,000 to 6,500 – and he said retirements and exits from dairying will happen in other countries.

Teagasc’s Laurence Shalloo said the cost of production had increased by 50% since 2020 and was now around 35c/l.

He urged farmers to focus on those costs that it was possible to take out.