IFA National Dairy Committee chairman Sean O’Leary has said that an announced 3 points jump in the Ornua purchase price index (PPI) to 114.3 points, equivalent to 34.7c/L including VAT, shows that Irish trading contracts are catching up with the stronger September butterfat and cheese in EU Milk Market Observatory (MMO) and spot-price reports.
Latest EU average returns remained strong to end September at around 41c/L. After a 5c/L processing cost is deducted, this would suggest a price equivalent of 36c/L + VAT. Mr O’Leary said that, as other European dairy farmers were continuing to receive increasing milk prices into October, it was well justified for Irish producers to expect at least 1c/L on September milk.
“Friesland Campina will pay suppliers an extra 1.25c/kg for October, or a milk price equivalent to 37.65c/L at the Irish 3.3% protein and 3.6% butterfat standard. Arla too have increased their October milk price by 1c/kg, which for their UK producers will translate into 1.5p/L increase to 32.3p/L. Also in the UK, First Milk have also flagged an October milk price increase of 1-1.1p/L.”
Mr O’Leary continued: “Irish co-ops will be meeting from this week to decide on their September milk price, and I believe board members must ensure that suppliers get at least 1c/L more for their September milk.
“Global milk production continues to grow a lot more slowly than expected. New Zealand is experiencing a very wet spring, which has resulted in a 1.56 per cent decrease in August supplies (Fonterra collections were down 2.5 per cent), a trend which has persisted into September, and which could damage their mid-October peak. While the US milk output is growing slightly faster at 2.1 per cent, the EU’s output growth is being held back by France and Germany’s only very modest recovery.
“Despite the 2.4 per cent decrease in this week’s Global Dairy Trade weighted average auction price for commodities for sale to April, it remains a fact that butterfat and cheese returns continue at historical levels, and demand for butter and cheese outpaces supplies globally.”
Mr O’Leary concluded saying markets remain strong despite some potential headwinds, and dairy farmers in Europe and further afield continue to benefit in increased milk prices. “Irish co-ops must make sure Irish farmers do not miss out.”