Ornua dairy returns fall marginally in April

The Ornua Purchase Price Index (PPI), a monthly indicator of market returns on dairy products sold by Ornua fell 1 point in April.

The result reflects general market trends globally for Dairy Prices.

Ornua (formerly the Irish Dairy Board) saw its PPI for the month of March rise to 100 points, 2.5 points up on the February level.

It was the second positive month in a row for Ornua’s dairy market returns with returns also increasing in February from a January low of 93.

The Ornua Purchase Price Index (PPI) is a monthly indicator of market returns on dairy products sold by Ornua (typically butter, cheese, whole milk powder and protein products), relative to comparable returns generated in a base year (2010).

Ornua PPI index

ppi index april

Prices fall 3.5% at latest Global Dairy Trade

Dairy product prices fell again at the most recent Fonterra Global Dairy Trade auction.

The event represents the fourth negative auction for prices in a row and the GDT index is now 37% lower than this time 12 months ago.

Average prices paid at the auction fell 3.5% on the last event held two weeks previously which itself was down over 3.6%.

Global Dairy Trade auction prices are now at their lowest level since 2009, according to Nathan Penny Rural Economist at New Zealand’s ASB Bank.

“Dairy prices are low and staying there a while longer,” he said in his analysis of the latest Fonterra auction.

After a drought-driven false dawn in early 2015, prices have returned to their 2014 lows and, according to Penny, the Bank expects prices to remain low over the next two to three months, before finally beginning their lift.

He says the reasons for the prolonged dairy price slump are twofold:

  • First up, New Zealand production has got a second wind, with the drought impact turning out modest and production forecast downgrades at the start of the year soon turning to forecast upgrades.
  • Second, at the same time, milk demand is scarce. Importantly, the Chinese economy has struggled of late.
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