The Ornua Purchase Price (PPI) Index for the month of January is 162.4, down from 173.4 in the previous month.
The Ornua PPI is a monthly indicator of market returns on dairy products purchased by the dairy giant (typically butter, cheese, whole milk powder and protein products), relative to comparable returns generated in a base year (2010).
Estimated member co-op processing costs of 9.0c/L (excluding any allowance for processor margin) for the Ornua product portfolio implies an indicative return of 49.1c/L, VAT inclusive.
The energy cost element of the processing cost is variable and changes each month depending on energy costs, according to co-op.
Ornua PPI
In addition, the Ornua Value Payment payable to members in the month is €300,000, which equated to 1.1% of gross purchases in the month.
The decrease in the PPI is due to recent market correction and resulting weaker returns across all products, according to Ornua.
Based on current spot pricing, further declines in the Ornua PPI are expected over the coming months.
Milk price
In other dairy news today, Cavan-headquartered co-operative, Lakeland Dairies, has warned that there is likely to be a “significant” correction on milk price in the coming months.
The co-op has highlighted to suppliers that in the past number of months dairy markets have “weakened significantly” with butter and skim milk powder (SMP) currently sitting at around 40% lower than they were in September 2022.
In its latest correspondence it pledged to “maximise the return” to members but it also sounded a cautionary note about market pressures at this time.
The co-op told suppliers that it is very aware that any movement on milk prices will have a major impact on farm families as inflation-driven input costs continue to create significant challenges.