Milk price recovery continues

ICMSA Dairy Committee chairman Gerald Quain

Dairy farmers have welcomed the announcement by Carbery of a 1.5c/l milk price increase, enabling the West Cork co-ops to paying 29-30 cent per litre for milk, becoming the first co-ops to reach that level since May, 2015.

IFA National Dairy Chairman Sean O’Leary also welcomed Glanbia’s 2c/l price increase to 28c (including a 1c co-op top up).

But Mr O’Leary said Lakeland suppliers are very disappointed at their increase of only 1c/l for October milk, leaving their price more than 1c l short of the Ornua PPI for October, which is equivalent to a 27.9c milk price.

With strong EU dairy product returns for October, IFA says Irish dairy farmers should be getting 30c for milk.

ICMSA Dairy Committee chairman Gerald Quain also said the dairy market is returning 30c, regardless of difficulties the sterling differential is causing to parts of the agri-food sector with a lot of exposure to the UK market.

He said Lakelands suppliers have expressed their anger and disappointment at their 27c milk price.

Kerry Group has also added 2c, going to 28c for manufacturing milk at 3.3% protein and 3.6% butterfat.

Announcing that Glanbia Co-op members will also receive 28c for October milk, Glanbia Chairman Henry Corbally said dairy markets remain fragile due to global uncertainties.

However, prices continued to climb at Tuesday’s Global Dairy Trade auction, conducted by Fonterra.

The GDT Price Index climbed 4.5%, and European farmers can take encouragement from the impressive 9.8% index rise for skim milk powder, a product in over-supply in the EU.

The rise took it to its highest price index in more than 18 months, which will make it easier for the EU to sell its large intervention store of the powder.

The average GDT Price Index across all products reached its highest level in over two years, supported by the slowdown in world dairy production.

New Zealand’s Kaikoura earthquake last Monday was not believed to have been a factor in the auction result, it has not significantly affected the New Zealand milk supply.

Instead, poor recent weather has reduced Fonterra’s production, down 2% year-on-year in September, with annual milk supply expected to shrink this year.

According to Fonterra, milk collections are well back for October, the peak milk output month in New Zealand.

Even more significant for the global dairy market is one of the largest ever annual falls in Australian milk production. The expected 7-10% slump is the biggest since 2002/03, the year of one of Australia’s worst droughts.

According to Rabobank Senior Dairy Analyst Michael Harvey, poor weather is exacerbating the effect of a milk price slump, leaving Australian dairy self-sufficiency at risk — although it was a net exporter up to this year. 

“There is a risk that Australia’s milk pool will remain stagnant or shrink further,” warned Mr Harvey.

In global market terms, the dairy slump in Australia helps to counter the US dairy boom.

The American herd is at its highest level in 20 years (9.36 million), with milk production up 1.7% year to date, high stocks of cheese and butter, and strengthening milk prices, but remaining competitive, thanks to low feed prices and strong domestic demand.


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