Global milk growth drops under 1%
Dairygold Co-op has left the base price paid for milk supplied in July unchanged, at 32c per litre including a 0.5cpl quality bonus and VAT, based on standard constituents of 3.3% protein and 3.6% butterfat.
World milk markets are supported by dry, hot weather in many continents taking annualised growth in global milk supplies under 1% for the first time since February, 2017, according to estimates by the UK’s Agriculture and Horticulture Development Board.
This contrasts with earlier forecasts suggesting milk supplies for 2018 would grow 1.5%.
In New Zealand and the US, risks are growing of a slowdown in milk growth, due to Fonterra in New Zealand cutting its forecasted milk price for the upcoming season, and US involvement in trade wars which may reduce access to export markets (which are now in any case below US prices for butter, cheddar and whole milk powder).
Despite these trends on the supply, side, the Global Dairy Trade Event on Tuesday concluded with the GDT Price Index down 3.6%. This included the butter index down 8.5%, and the skim milk powder index down 1.3%.
ICMSA Dairy Committee Chairperson Ger Quain yesterday welcomed numerous milk processors lifting the July milk price, noting that Lakelands, Kerry, Aurivo and individual co-ops in West Cork had all raised the price.
“Farmers will be looking at the fact that Lisavaird are paying over 35 cpl while Aurivo are at 31.5 cpl, that’s a very substantial price gap, and while ICMSA will always acknowledge those co-ops paying a rising price, we equally will always stress that the Ornua PPI is the minimum price that should be returned, and a higher price must be paid if possible”, said Mr Quain.
Meanwhile, IFA Dairy Chairman Tom Phelan expressed concern at an EU Commission proposal to extend to 2019 its new automatic tender process which has helped to prevent extra dairy produce entering its intervention stores.
From 2015 to 2017, over 405,478 tonnes of skim milk powder was taken off the market into intervention at a fixed price of €1,698/tonne, and 300,000t of this remain in storage.
“IFA takes the view that effective, responsive recourse to intervention when markets require it is a crucial part of the CAP tool box to protect farmers’ incomes from the severe market slumps, as we have seen in 2009 and in 2016, and will no doubt see again as market, weather and geopolitical volatility continue to impact dairy prices,” Mr Phelan said.
ICOS Agri Food Policy Executive Eamonn Farrell also warned against the intervention risk management tool becoming downgraded, like private storage aid was.
