Ornua announces PPI increase for June

Ornua has announced an increase in its Purchase Price Index (PPI) for the month of June, with a value of 110% given.

The PPI is up from 106.8% for the month of May, a jump of 3.2 percentage points; this is the second consecutive price increase from April’s value of 105%.

An increase of 1.8 percentage points was recorded last month for May, representing the first increase in the PPI this year.

Prior to this, 2017’s PPI had remained relatively static, beginning the year at 105.4% before decreasing to 105% in April.

June’s index is the highest value since September 2014, as can be seen in Ornua’s graph of the trend.

PPI
Image source: Ornua PPI

Expectations

The PPI increase will come as welcome news to the Irish Creamery Milk Suppliers Association (ICMSA), which announced that it was expecting a “significant jump” in Ornua’s PPI value for June.

The notable rise in dairy markets should result in a substantial increase, the Chairperson of the ICMSA’s Dairy Committee, Gerald Quain, said at the end of last month.

All market indicators have moved on strongly – with EU statistics showing that butter prices have increased by 17%; skimmed milk powder (SMP) prices are up by 14%; whole milk powder (WMP) prices rose by nearly 9%; and cheddar prices are up by over 7% since late April, he added.

Other lesser market indicators are following these trends or, in many cases, exceeding them. Farmer-suppliers are fully justified in anticipating an increase in the Ornua PPI for June, Quain said.

He highlighted, at the time, that the “very obvious gap” between the rise recorded in the Ornua PPI and the “significantly higher” increases witnessed in dairy markets was beginning to attract a lot of comments.

Milk price announcement

Yesterday, Lakeland Dairies was the first processor to announce its decision to increase its milk price for June supplies by 1c/L.

Suppliers of the processor will receive a June milk price of 33c/L including VAT.

This is the second consecutive monthly increase announced by Lakeland Dairies; it also increased its May milk price by 1c/L last month.

Other processors are expected to announce their June milk prices in the coming days.

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