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Saturday 23 February 2019

Global Dairy Trade sees fourth rise in succession as Irish co-ops hold their milk price

A cow in front of Fonterra Kauri plant
A cow in front of Fonterra Kauri plant

Claire Fox and Declan O' Brien

The second GDT (Global Dairy Trade) event of the year has seen prices rise for the fourth time in succession and has signalled a positive start to 2019 as Irish co-ops hold their milk price quotes.

The latest event saw the price index rise by 4.2pc, with Skim Milk Powder (SMP) and Lactose driving the lift in price this week.

SMP prices were up 10.3pc and Lactose was up 7.9pc. Butter prices  increased by 4.6pc while Cheddar and Anhydrous Milk Fat lifted by 4.3pc and 3.2pc respectively. Whole Milk powder increased by 3pc.

Just over 27,909 tonnes of product was sold at the auction.

Stronger demand for skim milk powder (SMP) has steadied global dairy markets ahead of Europe's spring calving season.

Spot market prices for SMP topped €1,800/t last week and stocks are expected to break the €2,000/t threshold over the next month on the back of lively buying of dairy proteins by traders.

The improved market outlook was reflected in the decision of both Glanbia and Lakeland Dairies to hold milk prices for December supplies at 32c/l and 32.06c/l (including VAT) respectively.

Lakeland Dairies will also pay an extra 5c/l Voluntary December Bonus to qualifying suppliers, based on peak to trough supply ratios. The co-op reported that milk supplies for December were up 17pc compared to 2017.

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Glanbia's returns include a 2c/l support payment from Glanbia Co-op, on top of a base price of 30c/l from Glanbia Ireland.

The farm organisations welcomed the processors' decision to hold December milk prices. Tom Phelan of the IFA said it was "the right thing to do in the current market context" given the challenging cashflow situation facing many dairy farmers.

He urged all co-ops to follow the lead of Glanbia and Lakelands and called on those that had cut their October or November milk prices to carefully review the situation.

Confidence

Ger Quain of ICMSA said the decision by Lakelands and Glanbia was reflective of improved confidence in global dairy markets.

Last week's increase of the Ornua PPI index to 107.5 for December - up 2.6 points on November and equating to a VAT-inclusive milk price of 32.2c/l - and the latest lift in the GDT were indicative of a major shift in market sentiment, the farm representatives claimed.

This was confirmed by the recent sale of more than 80,000t of SMP from EU intervention stocks, leaving just 22,000t to be sold.

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