Ireland's Glanbia sees weak dairy prices into 2016

DUBLIN, Aug 19 (Reuters) - The head of Ireland (Other OTC: IRLD - news) 's largest dairy firm Glanbia (Other OTC: GLAPF - news) sees weakness in milk prices continuing into next year but said that the scrapping of European Union milk quotas has been a minor factor in the recent slump.

Global dairy prices jumped 15 percent at auction on Tuesday, but prices remain near 12-year lows on slowing economic growth in China and global oversupply of milk products.

"The general expectation is that markets will continue to be volatile and that the current down cycle will continue into 2016," Glanbia Managing Director Siobhan Talbot told Reuters, adding that an improvement was most likely in the middle of the year.

Glanbia's joint venture with dairy farmers, Glanbia Ingredients Ireland, opened a 185 million euro ($205 million)plant in March to produce dried milk after the scrapping of EU milk quotas in April.

Talbot said the removal of EU production limits has been a relatively small factor in the current price slump, describing European supply increases in the first five months of 2015 as "very marginal". The more significant factor has been much stronger production increases in the United States, she said.

The market needs a correction in supply or an increase in demand, possibly from China, to return to equilibrium, Talbot added.

Glanbia on Wednesday reported earnings per share up 4 percent in the six months to June 30, excluding currency effects, with sales of sports nutrition supplements compensating for weakness in dairy prices. ($1 = 0.9040 euros) (Reporting by Conor Humphries; Editing by David Goodman)