June 21, 2012


Ireland's dairy co-ops to recall March milk prices



To be able to reinstate their March milk prices, Irish dairy co-ops have come under renewed pressure as stable trading at Tuesday's (June 19) latest global dairy trade auction followed a series of upward markets.


Tuesday's (June 19) trade auction was stable at a -0.5% average price, and 25,600 tonnes of dairy produce sold. Skimmed milk powders were down 4.8%. Even with a small downward adjustment in anhydrous milk fat of 0.8% to 3.7%, the overall market was stable, with butter milk powder up 2.5% and whole milk powder up 2.7%.


In a market briefing, Davy Stockbrokers noted that global milk prices were likely to continue rising, based upon a decline in global cow numbers and a slowdown in output, particularly in the US.


Though these factors point to a potential upward push on prices, the IFA says most co-ops have cut milk prices by an average of EUR0.06 (US$0.07) per litre for April and May versus the price offered in March.


IFA national dairy committee chairman Kevin Kiersey said "the combined price cut of up to EUR0.06 (US$0.07) per litre will represent a loss of up to EUR13,000 (US$16,500) in the income of the average 300,000 litre supplier over their 2012 supplies, and that is nearly 30% of the average gross dairy farm family income for the last three years.


"In these times of extreme volatility, and in the context of rising input costs, this is a major blow to suppliers, and it will make it nigh on impossible for them to make the kind of on-farm investment required to deliver on the post-2015 expansion expected of them."


Kiersey said European dairy commodity prices have stopped falling and are staging a recovery, citing European quotes for June 13.


He said that, since the beginning of the month, butter prices have lifted by EUR100 (US$127) per tonne in the Netherlands, EUR120 (US$152) per tonne in Germany, and EUR180 (US$228) per tonne in France; SMP prices have risen EUR140 (US$177) per tonne in the Netherlands, EUR100 (US$127) per tonne in Germany, and EUR70 (US$89) per tonne in France.


Kiersey said "whole milk powder prices are up EUR40 (US$51) per tonne, EUR80 (US$101) per tonne, and EUR90 (US$114) per tonne, respectively, while whey powder prices are up by between EUR90 (US$114) per tonne (Netherlands) and EUR155 (US$196) per tonne (Germany). We estimate that the average lift in the butter/skimmed milk powders returns is equivalent to an additional EUR0.015 (US$0.02) per litre return.


"Furthermore, the 13.5% increase in the latest average Fonterra auction price has also influenced the most recent global market quotes positively, with small increases in skimmed milk powders and butterfat prices for Oceanian and European products traded on the world market reported by the USDA in the most recent week."

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