Irish dairy group Glanbia has predicted that, while the global dairy market will remain weak for the remainder of the year, milk prices are expected to see a degree of recovery as milk supply falls.

“We have seen a very dramatic drop in milk prices since the start of the year and the volatility on the market is likely to continue in the near-term,” a spokesperson for the company told just-food.

“As conditions on the market decline, this is expected to have an impact on supply levels,” the spokesperson added.

In its annual report out yesterday (8 April), Glanbia said that it expects 2009 to be a “tough year”.

“Global dairy markets have weakened considerably from previous high levels with the outlook for 2009 deteriorating further,” group managing director John Moloney said.

However, he added: “We would expect that these markets will bottom out as a result of some supply contraction in a number of countries and as a result are likely to begin to rebalance through the end of 2009 and into early next year with some price recovery as a consequence.”

Based on current market conditions, Moloney said that Glanbia now expects to see “low- to mid-single digit growth” in earnings for fiscal 2009.