The latest Ornua Purchase Price Index (PPI) has seen an increase that reflects a price rise of 1.7c/L on last month’s price – the first rise in the PPI since December of last year.
After nine consecutive months of decreases (with the exception of June, when the index was unchanged from May), the PPI has now increased from an index figure of 117.4 for September to 122.3 for October.
With estimated member co-op processing costs of 7.5c/L (excluding any allowance for processor margins) for the Ornua product portfolio, the indicative price return for October is 36.1c/L including VAT, up from the 34.4c/L indicative price for September.
The energy cost element of the member processor cost is variable and changes each month depending on energy costs.
In addition, the Ornua Value Payment to members for the month of October is €5.6 million, which equated to 6.1% of gross purchases in the month (4.7% year-to-date).
Ornua said that the latest PPI figure “reflects stronger market returns through the month of October 2023”.
The latest PPI is a continuation of slightly brighter news on the dairy market front, with the general consensus being that the fall in prices throughout this year has bottomed out, with potential – albeit tentative – signs of recovery.
Richard Scheper, dairy analyst with RaboResearch Food and Agribusiness, told Agriland that there is room for “improvements” in milk prices; but that it was difficult to forecast if this will happen before the end of 2023.
“I do think that we are past the bottom or near the bottom when it comes to milk prices, so I do think there’s more potential upside than on the downside,” he said.
“What we have seen in the last three to four weeks might have been a short-term bullish run but if we look more to mid-term trends, we do see room for better prices for the end of 2023 and going into 2024,” Scheper added.