Farm Ireland

Monday 22 January 2018

Milk price steady as market slumps

Caitriona Murphy

Caitriona Murphy

Kerry, Glanbia, Lakeland and Town of Monaghan have all held their milk prices for July amid continuing pressure on dairy ingredient prices internationally.

Lakeland leads the pack, remaining on 34.25c/l including VAT, the same price it paid for June supplies.

Kerry, having already announced a back-dated 1c/l increase for April and May, is also sticking to its 34c/l prices for July. Glanbia and Town of Monaghan will also pay an unchanged 34c/l for July milk supplies.

The boards of the rest of the country's co-ops are due to meet this week, but it looks increasingly likely that they will also hold milk prices.

Dairy ingredient prices internationally have come under considerable pressure in the past fortnight, with prices for skim and whole milk powder falling by €100/t on average.

Industry commentators say this could be a symptom of August being the traditional holiday month for traders.

Prices also fell in August last year, only to revive again in September when traders realised that stocks had fallen below safe levels.

Nonetheless, all eyes will be on Fonterra's latest auction today to see the extent of market pressure.

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Prices paid in the online sale have fallen in the past two monthly auctions and the expectation is that they will fall again today.

Industrial butter (AMF) prices suffered the biggest price drop at the last auction, falling by 12.5pc to US$4,614/t. Skim milk powder prices dropped by 2pc to $3,488 and whole milk powder prices fell by 4pc to $3,475.

However, IFA dairy committee chairman Kevin Kiersey said a lot of Irish co-ops had forward sold at higher prices, insulating them somewhat from the current pressure on international markets.

"We certainly shouldn't be looking at any price falls in the price paid to farmers by Irish co-ops," he said.

He added that higher milk production worldwide and a fractional fall in dairy demand were contributing factors to the current slump.

"There was also a lot of buying done in the first six months of the year," he added.

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