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Butter price cut for third month in row

The Irish Dairy Board (IDB) has cut returns for butter for the third month in a row in a move that will cause concern among dairy farmers.

The IDB price for butter for February moved to €3,250/t, down €50/t on the January price. However, returns for skim milk powder (SMP) were unchanged.

Processors attributed the price drop to the continuing softening of the demand for product on global markets.

Prices were down 0.9pc in the latest Global Dairy Trade auction at Fonterra. Quotations in the latest Dutch Dairy Board auction were also back last week, with butter down €70/t, SMP back €50/t and WMP €30/t lower. Prices to farmers are unlikely to be affected by the weaker trade for the first three months of the year, but industry sources described the market as "very quiet".

One dairy processor said traders were "watching rather than buying" at the moment and he predicted that the next month could set the tone for the year ahead.

demand

Uncertainty in the market was also reflected in demand for the Private Storage Aid scheme for butter, with 11,054t being committed in the first two days it was open. This compares with 7,722t offered in the first week last year and just 1,431t in week one of 2010.

Ireland took up 504t of the total, with France, Germany, Holland, Denmark, Belgium and Britain taking up the rest.

Meanwhile, the ICMSA has expressed disappointment with the public comment by Simon Coveney, the Minister for Agriculture, that there was insufficient support at EU level to change milk quota rules.

"It's a huge paradox that as we head towards the complete abolition of quota, the pressure on farmers with regards to quota and possible substantial superlevy fines has never been as pressing," said Pat McCormack, chairman of the ICMSA dairy committee.

Mr McCormack said the ICMSA did not want to see a substantial increase in the cost of quotas in the run-up to 2015.

The prospects of a "soft landing" as the European Commission predicted for Irish dairy farmers is rapidly evaporating as predictions of ever increasing supplies continue for all the major European dairy exporters.

Rabobank predicts a rise in EU milk output of 9bn litres by 2016. It predicts the biggest increases of 1.8bn litres in both Ireland and Holland.

Indo Farming