Dairy co-ops and milk processors face tough decisions on milk prices for April and May, unless markets improve.

Tuesday’s Global Dairy Trade (GDT) internet auction sale saw the index drop by 3.5%, a fourth successive fall. It brings the overall price index to 730 – its lowest since August 2009.

The average WMP price at this week’s auction was down by just 1.8%, with volumes low. Prices for SMP fell by 7.5% and AMF dropped by 6.3%.

Butter, though down by only 0.8%, is around 10% below last week’s Dutch Dairy Board quoted price. European prices are generally higher than GDT and fluctuate less.

Milk price in mid-2009 fell to as low as 20c/litre, whereas now it’s around 30c/litre. Price is being supported by co-ops, directly in Glanbia’s case, but these results only increase price pressure.

In the North, with intense competition among buyers, some might hold for April, but face the prospect of bigger cuts for May milk if the output turns up again.

Exchange rates are having a significant effect on trade, with the euro exchange rate having fallen from over $1.35 to around $1.1 during the past year.

Prices in Northern Ireland are under greater pressure than in the eurozone. The weakening of the euro relative to sterling since December is equivalent to a price cut of around 4p/litre. Product from the Republic of Ireland and elsewhere in the eurozone is more competitive in the UK, putting pressure on NI sales there. At the same time, Northern product is less price-competitive in the Republic.

However, the exchange rate of the pound sterling is down by around 10% relative to the US dollar, which helps make product from the sterling area a bit more competitive on world markets than a year ago – although not nearly as competitive as products from the eurozone.