Milk prices are unlikely to see any reversal in fortunes before the end of 2015, global dairy experts have said.
With a raft of UK farmgate price cuts in recent weeks and the Global Dairy Trade (GDT) falling back 10.7 per cent at the most recent auction (July 15), those speaking to Farmers Guardian saw little indication of an imminent turnaround in prices.
It comes as NFU dairy board chairman Rob Harrison told a Farmers For Action (FFA) meeting last week prices could get worse before they improve.
Kevin Bellamy, senior dairy analyst at Rabobank, said: «The problem with global milk prices at the moment is there is still too much milk on the market.
«You have US average annual production still rising and EU production still rising. You can expect them to continue to rise over last year.»
Mr Bellamy added Russia was still not buying EU milk and China still had large dairy stocks. He claimed it could be the first quarter of next year before prices began to recover.
«We are going to see winter before any signs of recovery,» he said.
John Giles, divisional director at Promar International, shared a similar view of markets.
He said: «I think to see prices go back up we need a number of things to happen.
«We need the Chinese to start buying milk powder again and the Russians need to lift their import ban. We also need an end to the broadly favourable weather conditions around the world for dairy farming which could help to tighten supply.»
Mr Giles said he thought most farmers were resigned to the fact this year would be a period of sustained low prices.
John Allen, from Kite Consulting, said world markets were at a low level and price increases would take time to feed through to the UK.
He said: «It is a very tough market we have entered but we have got to be careful in assuming this will go on for 18 months since we do not see the average prices being sustainable at farm level.
«Cashflows are progressively deteriorating and banks are becoming more challenging.»
Source: FG Insights