Arla Foods has increased its September milk price by a further 1c/kg to 38.3c/kg (around 34.6c/l at 3.3%/3.6%) on the back of an increasingly severe global shortage of butterfat, as well as strongly rising demand, according to the IFA (Irish Farmers’ Association).

In light of this, the IFA’s National Dairy Chairman, Sean O’Leary, said he would expect Irish co-ops to continue increasing milk prices for August and later supplies.

“With butter prices continuing to rise, returns from EU commodities as reported by the EU MMO (Milk Market Observatory) for the middle of August amounted to around 40.7c/l before processing costs, and this despite weaker SMP (Skimmed Milk Powder) prices.

“Global demand is also strong, with European hot weather promoting the consumption of ice-cream, which also played into the butterfat shortages, and a continuation of China’s rocketing dairy demand growth (+30.1% in value for the first seven months of 2017 to July).

This has meant that, despite some weakness on some of the protein products, dairy prices are set to remain strong at least to year end.

“In this light, we are clear that further milk price increases are well and truly justified. Between August and December, Irish dairy farmers produce between 35% and 40% of their total annual supplies.

“Every cent passed back for August supplies and beyond will make a significant positive difference to dairy farmers’ financial situation after three years of cash-flow challenges,” O’Leary concluded.

Record US milk production continues

Meanwhile, across the Atlantic, record milk production levels per cow in the 23 major milk-producing states in the US continued during the month of July, according to the latest figures from the US Department of Agriculture (USDA).

Production per cow in the 23 major states averaged 1,969lb (893kg) for July; this equated to an increase of 21lb (9.5kg) on the same month in 2016.

This is the highest production per cow for the month of July since the 23 state series began in 2003, the USDA added.