Lower supplies tighten milk market

Milk prices reached a record high for December at United Dairy Farmers’ last auction of 2012, averaging 29.35p/litre.

Although that was 0.93p below the November price, it was 0.8p higher than the same time last year, said chief executive David Dobbin. “Taking account of international dairy markets, this was a good result,” he added. “It compares favourably with prices in the Republic of Ireland and the EU, and is significantly ahead of Fonterra prices, which are equivalent to about 22p/litre.”

Milk supplies were now increasing, with 42m litres going under the hammer compared to 39m litres in November. However, they were still below the previous year, when 46m litres were sold.

“Dairy markets are in better shape than they were at the start of 2012,” said Mr Dobbin. “A year ago markets were falling due to strong growth in global milk production. The opposite has now happened, with lower milk supplies helping to tighten markets. Many buyers have not covered their requirements for the first quarter of 2013, so if milk supplies remain tight we may see global markets strengthen further.”

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