Milk buyers across Europe have committed to further price increases for August and September.
“Although the 2013 and 2014 record years are likely to remain out of reach, 2017 will be a good milk price year,” said the Dutch LTO farmer organisation, which monitors prices paid to farmers by 15 of the main EU milk buyers.
LTO said the €8.80 per 100 kg milk price rise from July, 2016, to July, 2017 (a 33.3% rise) again confirms the volatility of milk prices.
One French milk buyer, the Sodiaal co-op, increased its milk price by €2.90 per 100 kg in July, but French prices are set to increase further, with Lactalis announcing €1/100kg extra for both August and September.
DMK in Germany will pay €1 extra for August, and Arla and FrieslandCampina have announced price increases for August and September totalling €2.
Pressure continues on the price of skimmed milk powder, still at an intervention price level, while Dutch prices for butter and whole milk powder have reached an unprecedented high level.
As a result of this and the unfavourable euro-dollar exchange rate, Europe plays no significant role on the world market now, according to LTO.
The increase of almost 2% in June was the first significant growth for a long time in the EU milk supply. But it is mainly Ireland and Poland taking advantage of strong markets, with supply increasing strongly, while still falling in major dairy countries such as Germany, France and the Netherlands.
Milk supply increased sharply in New Zealand’s low production month of June. However, slowing expansion is indicated by this year’s reduction in dairy conversions in Canterbury, one of the areas of largest growth over the last 10 years. A wet spring has also affected early season milk volumes.
In South America, a long period of shrinking milk production has ended, with a strong recent recovery in Argentina and Uruguay, and US milk production continues to grow, having averaged 2% growth for some time.
IFA National Dairy Committee Chairman Sean O’Leary said this week that European dairy market returns for August rose to a gross 41c/l milk price equivalent, before processing costs. He called on co-ops to pay at least 1c/l extra for August milk.
ICMSA Dairy Committee chairman Gerald Quain called for a substantial August milk price rise. He said Ireland is in 12th place in the EU for milk price, despite Irish product being of the highest possible quality, and Kerrygold butter being a global brand leader.