Farm Ireland

Tuesday 20 February 2018

Milk prices bounce as demand lifts

Caitriona Murphy

Caitriona Murphy

Town of Monaghan has followed Kerry's lead to set a milk price of 27c/l including VAT for March supplies.

Further March price increases are expected from other co-ops later this week as international dairy markets continue to improve.

As we went to press the Glanbia board was meeting, with some members speculating a lift from the 26c/l paid for February supplies was likely.

The boards of Dairygold, Lakeland and Connacht Gold are due to meet in the coming days.

However, the Irish Dairy Board (IDB) has decided against raising March returns for butter and skim milk powder (SMP).

While demand for butter has improved over the past three months, the IDB has held its price at €2,600/t, while SMP has stayed at €2,000/t.

IFA dairy chairman Kevin Kiersey has urged co-ops to commit to further lifts in milk price to at least 28c/l including VAT, before peak production begins in May.

He described the 21pc rise in milk powders and butter oil in the recent Fonterra trade auction as the clearest sign yet that the market recovery which started a few weeks ago was far more than a flash in the pan.

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"This must give confidence to co-ops to lift milk prices significantly and immediately, with a view to reaching 28c/l plus VAT before peak," he insisted.

Mr Kiersey said the price hikes would give dairy farmers a "well justified fillip" after the most severe income crisis this generation.

This view was echoed by ICMSA dairy committee chairman Pat McCormack. He pointed out that Dutch quotations for butter and SMP had increased by €50/t and €60/t respectively, returning a price in excess of 32c/l before processing costs and excluding VAT.

"On this basis, dairy farmers can expect further increases in the April milk price," Mr McCormack maintained.

Although the expected price rises will be welcomed by Irish dairy farmers, global dairy analysts have warned that a spike in European milk supplies could upset the return to dairy price stability on world markets.

The latest global dairy report from Rabobank has warned that a large surplus of EU milk on the world market could destabilise markets once more.

Dairy analysts from the bank warned that the EU supply situation posed a risk for global dairy markets.

However, the bank accepted that international prices for dairy commodities would remain close to current levels up to June.

Irish Independent