Latest market returns to the Irish Dairy Board is set to mean a milk price in the high 20s according to a recent market update by Irish Cooperative Society (ICOS).
This week the Irish Dairy Board published its Purchase Price Index for November which has dropped to 99.5, the first time the index has been below 100 since August 2012.
According to ICOS, this is suggestive of milk prices dropping into the high 20s for the first time in over two years, and the IDB has been guiding milk prices for 2015 of somewhere in the region of 25c/L plus VAT.
ICOS says this view is further supported by both Teagasc and Glanbia warning farmers to prepare for a VAT inclusive average price of 27c/L for the coming season.
The co-operative body says the outlook for the 2015 season continues to deteriorate, with all the key indicators pointing to further weakness.
It says this week’s Eurex index values SMP at €1,835 per tonne, with reports of some Skim powder selling at below the intervention buying-in price of around €1,745. Meanwhile, the butter quote, at €2,865 is still almost 30% above the intervention price.
ICOS outlines that the Eurex quotes value milk at around 22.4c/L plus VAT. It adds that, the Eurex index captures the worst of market volatility on the way up and on the way down, but it is, nonetheless, a reliable indicator of market sentiment.