All of Europe’s milk purchasers have announced price increases for August and September milk, reflecting fast-rising butterfat returns.
This price round up by the IFA (Irish Farmers’ Association) shows that a minimum 1c/L milk price increase is fully justified for Irish farmers this month, with the prospect of an equivalent minimum increase for next month, according to IFA’s National Dairy Committee Chairman, Sean O’Leary.
“It is clear that slower than expected production growth, continued shortages of butterfat, and strong international dairy demand are currently making up for the weakness in SMP (skimmed milk powder) prices.
“This trend, very strong in Europe where modest quantities of SMP are again being sold into intervention by some countries, was clearly visible in yesterday’s GDT (Global Dairy Trade) auction,” he said.
“Many international milk purchasers have announced significant milk price increases for August and September milk,” O’Leary added.
Giving examples, the chairman noted: “Dutch Friesland Campina has lifted its September ‘guaranteed’ price by 2c/kg to 40.5c/kg, to reflect market returns and the price evolution from its main European competitors.
“Arla has already announced a 1c/kg increase for September milk, citing also the fast-rising butterfat value.
“For British member suppliers, this will be equivalent to a price of 30.79p/L (33c/L at current exchange rate),” O’Leary noted.
In France, where price increases have been relatively slow until now, the largest milk purchaser – Lactalis – has increased its September price to 36c/L, following an August price of 35c/L and a July milk price of 34c/L.
The chairman also took into account milk prices outside Europe, saying: “Further afield, in New Zealand, ASB Markets predict that the stronger butterfat value could lead to an increase in the Fonterra 2017/18 forecast to NZ$7/kg.
“It is clear that Irish co-ops can and must pass back a minimum 1c/l increase for August milk, and be prepared to up the September milk price when the time comes,” O’Leary concluded.