On-farm focus needed as world dairy prices slump

Global dairy commodity prices have slumped over the past six weeks, with Fonterra’s GDT auction losing another 8.4% on Tuesday.

With a weighted average price of US$3,025/t (£1,794), that brings the total drop to more than 20% since mid-June and the lowest level since August 2012.

According to Nick Holt-Martyn at The Dairy Group, the three major exporting countries in the northern hemisphere had passed their season peak at an all-time high. “And conditions in the southern hemisphere are indicating a good start to the new season, although recent months have been below 2012 levels.”

Lower UK milk prices this winter should not dampen supply too much, as producers were likely to take advantage of cheaper feed, added Mr Holt-Martyn. “Markets therefore look set to remain weak into 2015. Then, with quotas ending in March 2015, there is likely to be further supply pressure in the absence of adverse weather.”

However, it was not all doom and gloom, he suggested. “The message to farmers is to focus on cost of production and unit productivity, and let the externals take care of themselves.”

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