Are international milk prices beginning to stabilise?
Two consecutive rises in milk prices at January Global Dairy Trade (GDT) auctions may have signalled that international dairy markets have bottomed out.
However, it must also be set in the context of a massive decline in GDT prices throughout 2014 and a general fall in milk prices in Europe and the US.
- Arla Foods – Arla’s Irish Milk Constituent equivalent price of 28.40c/L in January represent about a 7.3% drop over prices paid to farmers in December. Arla’s figures show that while there only a marginal drop in protein price (-0.8%), the fall in its fat price was dramatic (-14%), hence an overall large price drop.
- FrieslandCampina – Farmgate milk for Irish milk constituent equivalents posted a marginal fall of 1.2% in January over the December price down to 29.24c/L.
- Fonterra – No change in price, but currency changes helped increase euro value by 1c. Fonterra’s Irish Milk Constituent equivalent price is currently 24.05c/L up over 4% on the December price.
- GDT Whole Milk Powder (WMP) – Have we reached the bottom? Both GDT auctions in January showed marginal increases. However, one must remember the GDT has suffered 50% decline in 2014. In January 2014 WMP average prices were 39.94c/L compared to 17.29c/L this month.
- US Class III Milk Price – When calculated for an Irish milk constituent of 3.9% fat, USA ‘Announced’ Cheese Milk Prices show an over 17% drop in January. This major fall is primarily due to the skim milk component price falling dramatically
- IFCN Global Raw Milk Price – The IFCN price remains almost unchanged since September. Given that this world milk prices is a weighted average of key dairy commodities, it may be an early sign that the steady drop in milk prices is tapering out. Does this indicate that the floor for Irish milk (at 3.9% butterfat/3.35% protein) is around 27.63c/L?
- Russian Farmgate Milk Price – The rouble value of Russian milk has been relatively stable for the past 12 months, but in euro prices are showing to be much lower due to the dramatic weakening of the rouble. Furthermore, if the Russian market does open up any time soon Euro exports will be very expensive for Russian consumers to purchase dairy products.