The latest Ornua Purchase Price Index (PPI) has seen a notable increase, reflecting an increase in the associated indicative milk price of 2.7c/L.

The PPI for October stands at a 144.8, up from 135.8 for September.

This implies an indicative return of 40.9c/L, inclusive of VAT at 4.5%, for milk at 3.6% fat and 3.3% protein.

This in an increase on the 38.2c/L price for September.

This increase comes even as the estimated processing cost for Ornua member co-ops increased by 0.5c/L to 10.5c/L.

The indicative milk price is net of Ornua's costs to market.

The result reflects a positive lift in overall market returns for the month of October, the business said.

Ornua noted that the PPI relates to product settlements and payments for the month, and "for reasons of seasonality is not directly aligned with milk production and payment".

The estimated processing cost of 10.5c/L is based on Ornua’s estimate of the average cost of processing the Ornua "basket of products", which is not representative of any individual member co-op processor.

The processing costs also excludes any allowance for member co-op processor margin.

The cost is tied to external indices of costs which are updated every quarter, with energy being the main factor.

Therefore, a new estimated processing cost of 10.5c/L is in place for the last quarter of the year.

Apart from the PPI update, Ornua also confirmed that the Ornua Value Payment payable to member co-ops for October is €5 million, which equated to 5.8% of the gross purchases in the month.

GDT rises again

In other dairy market news, the Global Dairy Trade (GDT) index has increased for the third time in a row, following the latest trading event yesterday (Tuesday, November 3).

The index increased by 3% compared to the last index update two weeks ago, with the latest upward move reflecting an average price of €3,714/t.

The latest increase follows increases of 2.5% on October 20 and 1.2% on October 6.

Of the 12 most recent GDT trading events (including today's), going back to late May, the index increased on eight occasions and decreased on four occasions.

Those decreases included a 4.9% drop in June, the biggest movement in either direction in the GDT index in that time.

However, the index now sits at a figure of 1,243, the highest it has been since St. Patrick's Day this year.