2.5c/litre rise sets early milk price pace

Dairy co-ops have been urged to follow this week’s leaders on milk prices, who increased prices by 1-2.5 cent per litre, for August milk.
2.5c/litre rise sets early milk price pace

Setting the early pace were Lakeland (up 1cpl), Drinagh (up 1.5cpl), Glanbia (up 2cpl), and Kerry (2.5cpl).

IFA President Joe Healy called on co-ops paying the lowest prices to lift the August price by at least 1cpl.

According to ICOS, which represents the dairy co-ops, strong recovery in butter markets is driving sentiment currently, with last week’s Eurex Index suggesting an “unbelievable” value of €3,972 for butter, boosted by a German figure of €4,225, the highest reported from Germany in almost three years.

In contrast, the skim milk powder index has advanced only to €1,927, reflecting the intervention overhang of around 300,000 tonnes. However, intervention buying has slowed, from as high as 22,000t per week week in mid-March to only 350t per week recently.

ICOS sources said the new Ornua Purchase Price Index of 85.8 values milk in the mid 20s, and sustained recovery in powder prices is needed to return to milk prices farmers would deem to be sustainable.

Also boosting the EU market is news that UK milk production continues to lag 6%-7% behind last year, and milk supplies are reducing across the EU, but particularly in France, Germany, Poland, and Denmark. Dutch milk production had led the EU expansion, but its growth rate is now slowing.

Due to the slowing milk output, some Brussels sources say the 1.1m tonnes EU milk reduction scheme will be oversubscribed after its first period (for which today is the application closing date in Ireland).

If oversubscribed, the scheme will be closed, and an allocation co-efficient will diminish the volume eligible for payment per farm.

* Glanbia Chairman Henry Corbally said that there has been a welcome improvement in prices for dairy products on global markets. “The board will continue to reflect market returns on a monthly basis,” he said.

A 2 cpl Glanbia Co-op Society support payment and a Glanbia Ingredients Ireland base price (GII) increase of 2 cpl will take the price to 25cpl for member suppliers’ manufacturing milk supplies (at 3.6% fat and 3.3% protein). The co-op’s 2c support payment is also added to August liquid milk supplies.

And members who signed up for the Glanbia Advance Payment (GAP) interest-free cash flow support have been paid 2 cpl for all eligible milk supplied in May, June and July, and will get 1 cpl of interest-free cash flow support for August milk volumes.

The Glanbia Board has extended the final closing date for 2016 GAP scheme applications to November 30.

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