The Ornua PPI (Purchase Price Index) increased for a sixth consecutive time in December, reflecting higher market returns in the month across all products, Ornua announced.
The monthly indicator of market returns on dairy products purchased by Ornua (typically butter, cheese, whole milk powder and protein products) for December increased to 103.8 points.
This latest figure is up from the 99.4 points for November returns.
The PPI Index for Dec is 103.8,adjusted from 99.4 in Nov, reflecting higher returns in the month across all products https://t.co/NKR4oF3Qij
— Ornua (@ornua) January 12, 2017
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The PPI can provide a reference as to how the general dairy market is performing, and may help to guide expectations around likely returns for dairy products and the milk used in their manufacture.
The increase in the PPI comes following the announcement by Lakeland Dairies earlier today, January 12, that it is to increase its December milk price by 1c/L.
Factoring in this increase, it will pay suppliers 30.28c/L including VAT for December milk. It is the first processor to set a price for December milk.
In recent days, co-ops have been encouraged to pay over 30c/L for December milk supplies.
Speaking to Agriland recently, ICMSA President John Comer said the market should be returning over 32c/L.
“Further contraction in supply is feeding into this and glitches in recent Global Dairy Trade auctions are not significant.
We’re encouraging boards to consider what the market is returning and maximise the price paid to the primary producer, many of whom are still trying to clear debt.
Comer said that looking forward he expects the market to return 33-34c/L at most and that much depends on the European Commission and how it releases the skimmed milk powder (SMP) in intervention.
Meanwhile, a minimum price of 30c/L plus VAT would be fully justified on December milk, with a view to reaching at least 33c/L before peak, IFA National Dairy Chairman Sean O’Leary has said.