The short-term outlook for dairying is positive, a new analysis from Teagasc has forecasted.
Trevor Donnellan and Emma Dillon in Teagasc’s Agricultural Economics and Farm Surveys Department suggest the dairy market situation will partially depend on factors which are difficult to anticipate.
These factors include the impact of potential La Nina weather conditions in the Southern Pacific and geopolitical considerations, such as the potential imposition of US trade tariffs.
Nevertheless, the short-term outlook is positive, given that dairy commodity prices have been moving to higher levels in recent months.
On the demand side, continued weakness in Chinese dairy imports is anticipated, although it is thought stock levels are in decline.
The average milk price in 2025 is forecast to improve by 5pc compared to 2024
On the supply side, milk production by the main dairy exporters should increase by about 0.3pc in 2025.
The GDT has continued to report positive price movements in recent auctions, indicating that the outlook for milk prices entering 2025 remains favourable.
For 2025, assuming more favourable production conditions, a slight further increase in EU milk production is possible, perhaps about 0.2pc. The researchers expect dairy profitability per hectare to increase by 35pc.
Average net margin per hectare is estimated to be €1,578 for 2024 and is forecast to rise to €2,126 in the coming year.
The average milk price in 2025 is forecast to improve by 5pc compared to 2024, and with a marginal reduction in production costs, this would mean that gross and net margins are forecast to increase in 2025.
Net margin per litre is forecast to increase by 29pc in 2025 to an average of 17c/L. A 4pc increase in milk production is forecast for 2025, with a stable dairy cow population and a recovery in milk yields, contingent on normal weather conditions.
From a position close to the bottom of the EU milk price league in 2023, Irish milk prices exceeded the EU average in 2024.
The high price of butter has been the main driver of the recent increase in Irish milk prices.
While the short-term outlook for butter prices remains positive, past experience suggests that very high prices can only be sustained for a limited period, therefore some weakening in butter prices later in 2025 may emerge.
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