Hello everyone, I hope you are enjoying a relatively stress free build up to Christmas! The festive season is indeed upon us and as we look back over the year we can be correct in saying it has been another drama filled period in the dairy industry. After the record high pricing in 2017, the general feeling was 2018 would see a gradual reduction in pricing. However, seasoned experts were proved wrong yet again as we saw another dramatic increase in the Spring on butter especially. Thankfully we seem to have got over the worst 2018 threw at us but who knows how 2019 will play out?
As the end of the year descends upon us it is hard to believe how quickly it has all passed by yet again! We understand that 2018 was another challenging year for all of our customers who have had to deal with more turbulence on their pricing. We live in uncertain times both in the dairy sector and politically so nobody can be sure what 2019 will bring. However, we are encouraged by the developments of recent months and we will keep our customers closely updated as we see more activity. Again, we would like to thank everyone for keeping faith with us over the course of the year and we hope you are satisfied with the effort we put in.
We wish everyone a very happy Christmas and a prosperous New Year. Bring on 2019!
There was a major announcement of a merger between the Irish co-ops Lakeland and Lacpatrick. The two co-ops are based around the border region and have a combined 3,200 milk suppliers with an overall pool of 1.8bn litres. This will make the new merged co-op the second biggest in Ireland after Glanbia.
As both co-ops operate in the border region it seems to make sense to combine to alleviate the possible barriers on a potential border provided by Brexit. This will also provide a great opportunity to increase exports due to the large upscale in operations which will make them a bigger global player. The increased scale of efficiencies may be needed for Irish co-ops to stay competitive in the growing export markets. The likes of Denmark, Netherlands and New Zealand divert their milk production to ‘super co-ops’ for example. The director of Dairy Industry Ireland, Conor Mulvihill, said in an interview with the Irish Independent that further integration across the Irish dairy industry is inevitable.
Greetings to you all we hope you have been enjoying the fantastic sunshine over the course of this record breaking summer! It is safe to assume most of us have been pleasantly surprised by the heatwave we have encountered and long may it continue. However to keep up the recent trend there is always scepticism when it comes to volatility in the dairy sector and the extreme lack of rain is putting pressure on farmers across the continent. This has come on the back of another huge jump in price on especially butter and mozzarella over the last few months. There are several predictions being shared by experts on what lies ahead but if we have learned anything from the past 2 years it is that predictions can look very silly indeed!
An uncertain market but with ever increasing demand
To conclude it is clear we are working in a very uncertain market and trends become even harder to predict in the light of ever increasing demand for dairy. However it must be said that it is positive that demand for natural dairy is growing and we hope this continues. It is clear though that work needs to be done to address the supply issues that are ongoing as the sharp sudden increases in price are tough for everyone to deal with. I hope all of our customers appreciate we do our very best at Ingredient Solutions to provide you with the best deal possible in a challenging environment. We hope you feel we do our best to provide you with as much information as possible to show the challenges we face. As ever we always try to think in a positive manner and we feel there has to be a point where prices reach a much more sensible level. As always we will keep you posted on any developments and we wish you all a pleasant summer.
As mentioned in the previous post many buyers were caught unaware yet again as butter soared in price over Q2 due to ever increasing demand. The price neared the astounding levels seen in 2017 where record prices were shattered.
That record price hike was considered initially as a freak occurrence but it now seems to be making itself a permanent feature in the market as prices are now hovering around the €5500/ton mark. This is considerably lower than the €7000/ton peak reached last year but when you consider the historical butter prices it is still at an extremely high level. This must be of huge concern to buyers all across the industry as it is fair to assume absolutely nobody foresaw this prolonged period of steep prices. Is it likely to come back? Simple logic would have to say surely soon but all the fundamentals we have based predictions on in the past now look increasingly futile in an unpredictable environment!
As previously alluded to the record breaking summer we have experienced so far has been great for holiday makers and beach goers but the drought is causing great concern among farmers. Many have already been forced to dig in to their winter silage supply to sustain their herds due to the lack of grass growth.
The extra costs of buying in extra feed are also taking their toll and are impacting the bottom line. The normally lush green pastures of rural UK & Ireland are now an arid brown and this was clearly evident at the recent Open at Carnoustie which visually looked more like a Dubai Desert Classic! There has been a small amount of rain in recent days but nothing too substantial and farmers will need the heavens to open up some more to relieve some of the pressure they face. The conundrum is simple, if the drought continues and farmers are further hindered there will have to be an effect on dairy commodity prices. The last thing we need is another factor coming in to play to drive prices to an even more silly level so we will watch this one with bated breath.