A sixth positive Global Dairy Trade (GDT) auction result in a row on Tuesday indicated dairy markets remain healthy.
Strong demand from China and Southeast Asia for whole milk powder and skim milk powder from New Zealand helped boost the GDT Price Index 1.8%, to the highest level since May, 2014.
Led on Tuesday by a 10.7% increase in the buttermilk powder price and a 6.2% increase in the butter price, the GDT Price Index has risen 19.3% in three months, and 13% in a year.
GDT butter prices have surged by more than 50% from their 2020 low in September, encouraging for Irish exporters, who are among the top five EU exporters of butter (and of whole milk powder, and a substantial EU exporter of skim milk powder to China in 2020).
With the European Commission saying the EU is currently the most price competitive globally for cheddar, and more competitive than the US or NZ for whole milk powder, and EU-27 exports in 2020 having increased 3% over 2019, or 4% by value, the strong GDT run comes at a good time, after the peak of the 2021 New Zealand milk supply has passed.
It also comes at a good time for Irish dairy farmers who, together with their counterparts in Italy, and Poland, have led 2020’s increase in EU milk production.
This increase has contributed to EU production increases of 3.4% for skim milk powder, 3.3% for drinking milk, 2.8% for butter, 1.6% for cheese 1.4% for whole milk powder, but rising global demand has matched the supply increase.
Despite strong global markets, the milk prices picture across the EU in January and February is mixed, according to the monthly price report by ZuivelNL on behalf of the LTO Nederland farmers organisation, in collaboration with EDF (European Dairy Farmers).
It says the milk prices of Arla (Denmark) and FrieslandCampina (Netherlands) will decrease in January by €1.20 and €0.90 per 100 kg, respectively, followed by no change at Arla in February, and a €0.70 price increase at FrieslandCampina in February.
The milk price of Milcobel (Belgium) increases by €1.40 in January, while the milk price of Saputo Dairy (UK) remains unchanged until March. The milk price of Emmi (Switzerland) will increase in January and decrease in February.
In the ZuivelNL monthly milk price comparison, Glanbia paid out the biggest price increase for December milk of the 16 processors included, thanks to a 2c per litre bonus paid for December milk by the Kilkenny-based processor, which also pushed Glanbia to the top of the Irish Farmers Journal monthly price league, and lifted Centenary Thurles to joint top place, because they sell most of their milk to Glanbia.
Meanwhile, Glanbia Co-op says it will continue for 2021 the Share of Glanbia Ireland Profit payment (as in 2020, it will be 0.4c per litre for all milk).
It will also pay a trading bonus in 2021 worth up to 0.4c per litre (or €10 per tonne of grain supplied).
The Co-op owns 60% of Glanbia Ireland and receives a dividend each year equal to 30% of the processor’s annual profit, for distribution to active farmer members of the Co-op as “Share of GI Profit” and “Trading Bonus”.
The co-op also paid €10m in share interest (dividend) payments to Co-op Members in 2020. And beef, sheep and pig farmer Glanbia Co-op members can qualify for a feed bonus.
The three Irish processors included in the ZuivelNL monthly milk price comparison, all paid less than the average of €33.53, with Dairygold at €32.37, Glanbia at €34.21, and Kerry Agribusiness at €32.01. They are even further behind other European processors in the €33.02 12-month rolling average, with Dairygold at €30.83, Glanbia at €30.53, and Kerry Agribusiness at €31.35.
The December milk price also increased at FrieslandCampina, Müller (Germany) and Sodiaal (France), in addition to Glanbia. The price fell at Danone (France) and Saputo Dairy (UK).
The average December price of €33.53 across 16 processors is 1.9% behind the December 2019 price, despite the average rising for the seventh consecutive month.
This left the average 2020 milk price 2% behind 2019, before supplementary payments based on co-op profit distributions or top-ups.
The ZuivelNL report said the EU dairy market has become a lot more dynamic over the past few weeks.
The price quotation for butter rose sharply in January, after a stable second half of 2020.
The high price of cream plays a role in this, along with good demand from the retail channel for butter in consumer packaging.
The price of skim milk powder also showed a strong increase in January, thanks to global demand.
However, Europe is again increasingly faced with competition from cheaper US supplies.
The price of whole milk powder moved up in line with the prices of skimmed milk powder and butter.
The 2020 EU milk supply, including November, increased by 1.1% compared to 2019.
The aggregated volume of the major global dairy exporters (including the EU) was up 1.8%.
