Irish processors out of step with downward EU milk price trend

By Stephen Cadogan

The fifth consecutive month of unchanged Irish milk prices in January impressed market observers at the Dutch LTO farmer organisation, which monitors monthly prices paid to farmers by 17 EU milk processors.

In contrast, German and Dutch processors led January milk price reductions by most of the 17 companies.

LTO said February and March prices will fall further across the EU, by €2 and €2.50 per 100kg, respectively, at Arla in Denmark; and by €1.70 and €0.20 respectively at FrieslandCampina in the Netherlands. The DMK price in Germany is scheduled for a €4 cut in February.

LTO’s January milk price report, released last week, showed Dairygold, Glanbia, and Kerry all paying over the average of 17 EU milk buyers.

Compared to January 2017, this average is 7.2 % higher.

LTO says the EU market has benefited from butter (and whole milk powder) prices rising since January, attributed to demand for Easter, and to buyers having postponed purchases. Butter exporting was becoming more difficult due to the rapidly rising price. Skim milk powder prices continued weak, well below intervention prices since October.

Spot milk prices in Italy have been stable, and increased in the Netherlands.

But milk deliveries were up, 2% for 2017 in the EU and growing strongly in December. Supply also increased in exporting countries such as Argentina, Australia, and Uruguay; but growth slowed in the US to only 1% since September. The New Zealand supply was back year-on-year 3% in December and 5% in January. But rain has eased drought worries, and increased supply to Tuesday’s Global Dairy Trade auction nudged average price down 0.6% (milk futures had predicted a 2% drop).

The skim milk powder price rallied 5.5%. UHT grade product SMP made €2,590 per tonne, in sharp contrast to the €1,100 for 4,300 tons of the lower standard SMP which the European Commission sold out of intervention at the end of February.

Overhanging the dairy market is about 380,000 tonnes still in EU intervention storage.

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