January milk price cuts have been announced by some major continental processors, writes Stephen Cadogan.
FrieslandCampina, based in the Netherlands, and DMK in Germany, have slashed prices by €4 and €5 per 100 kg of milk, respectively.
Never before did these two companies lower their milk price so much in one month, said the Dutch LTO farmer organisation, which monitors monthly prices paid to farmers by 15 of the main EU milk buyers.
LTO said Arla in Denmark has announced no change in its December milk price, followed by a decrease of €0.90 per 100kg in January.
Dairy Crest in the UK announced a December price increase of 0.5p per litre, and a cut of 1p (about €1.10 per 100kg) in February.
LTO analysts noted the difficulty for European dairy exporters to compete on the world market, particularly because of the unfavorable exchange rate with the US dollar.
The market has also seen butter prices fall further in December, and prices for skimmed milk powder for food quality continued weak, well below the intervention price level since October.
Meanwhile, the increasing EU milk supply was being felt on markets, exacerbated by a shock upward revision of UK production statistics, adding 332 million litres to their January to October estimate.
LTO’s November milk price report, released last week, said the 15 EU processors they monitor mostly increased milk prices more than 30% across 2017, but the highest increases, of almost 40%, were recorded in Germany and Ireland (where LTO monitors prices paid by Dairygold, Glanbia, and Kerry).
November prices at the Irish companies, per 100kg, were respectively €36.30, €34.84, and €35.86, compared to an average of €36.84 across the EU.
The Irish trio also bring up the rear in terms of 12-month rolling average prices, respectively €34.06, €33.47, and €33.38, compared to an EU average of €34.58.