Carbery to introduce fixed milk price scheme of 33c/L

Carbery Group is set to introduce a fixed milk price scheme of 33c/L for the next three years.

Suppliers can avail of the scheme on 20% of their supply for each of those years, it is understood.

The development was welcomed by the Irish Creamery Milk Suppliers’ Association (ICMSA) which said that the scheme from Carbery is a “major statement in terms of market confidence”.

Ger Quain, the association’s Dairy Committee chairperson, said that the Carbery scheme shows that “companies are willing to commit to improved fixed milk price contracts to secure product even in a post-Brexit world and with all the current uncertainty around Covid-19”.

In terms of the milk prices generally, the Ornua Purchase Price Index (PPI) and other market indicators over the last number of months should see milk prices remaining in a positive position for the remainder of the year, Quain argued.

Despite the news today (Tuesday, November 3) that the latest Global Dairy Trade (GDT) event saw a drop in the price index, Quain highlighted that the preceding three auctions had returned positive results.

“Dutch dairy quotations for the key indicator butter/SMP mix have seen an upward trend – albeit at a slow pace – since the start of September. The WMP price mix has remained steady since July with relatively little movement up or down in that time,” the ICMSA dairy chairperson outlined.

He continued: “Demand for dairy products is steady across Europe but has seen a marked increase in Asia in 2020 which is probably absorbing the extra supply of milk across the globe.

This all leads to a stable-but-positive outlook for the remainder of the year meaning that processors and co-ops must be looking at spring 2021 to make sure that prices can start off the new year in a positive note.

“Based on current market indicators, the minimum price that all co-ops should be paying for October milk is 32c/L,” Quain argued.

GDT index drop

The GDT index dropped today for the first time in four auctions, following three consecutive increases.

The most recent auction – event 271 – concluded this afternoon (Tuesday, November 3) with the GDT Price Index down 2.0%.

Lasting one hour and 54 minutes, today’s tender saw 161 participating bidders go head to head across 14 rounds, with 122 winning bidders recorded.

A total of 35,418MT of product was sold on the day.