Dairygold has reduced its milk price by 6.0c/L to 46.0c/L for February milk supplies, based on standard constituents of 3.3pc protein and 3.6pc butterfat, inclusive of sustainability and quality bonuses and VAT.
It’s the second month in a row Dairygold has cut its milk price by 6c/L and follows Kerry Group and Lakeland Dairies, both of whom cut their milk price for February milk by 6c/L earlier this week.
In a statement, it said dairy market prices have continued to weaken due to increased global milk supplies and reduced demand driven by inflationary pressures.
“The outlook for market returns is still uncertain but Dairygold will continue to maximise the returns from dairy ingredients to pay milk suppliers.”
The February early calving bonus of 2.10c/L including VAT will be paid on milk supplied in February in accordance with milk quality criteria.
Milk supplied in February that qualifies for the early calving bonus will have a quoted milk price of 48.10c/L.
The February milk price equates to an average farm gate milk price of 55.0c/L, based on average February milk solids.
The quoted milk price for February based on EU standard constituents of 3.4pc protein and 4.2pc butterfat is 50.2c/L.Similarly, Kerry Group cut its base milk price by a further 6c/L for February supplies, to 44c/L (VAT included) at 3.30pc protein and 3.60pc fat.
On Monday, Lakeland Dairies also cut its milk price for February milk by 6c/L citing that "weaker dairy market conditions” are continuing to have a serious effect on market returns.
This is the second 6c/L cut Lakeland Dairies has announced this year and in a statement it said that “overall outcomes remain unpredictable and there is continuing variability which will remain a feature of global markets for the immediate period ahead”.
Last week, dairy prices disappointed at a Global Dairy Trade (GDT) auction, with returns down just under 1pc, while Ornua has indicated its February returns imply an indicative return of 45.0c/L, VAT inclusive (down from 49.1c/L in January).
Ornua said the decrease is due to continued weaker returns across the product mix.
At the GDT auction, whole milk powder prices were largely flat and described as ‘wrong footing’ futures market expectations of a circa 2pc lift.
Prices for most other products eased (including a 10pc dip in cheese prices), taking the overall GDT index circa 0.7pc lower.
According to Nat Keall, Economist with New Zealand bank ASB, in Europe milk production continues its tentative improvements, albeit off a low base.
"Supply isn't surging but looks set to outpace demand for a while yet," he said.