LacPatrick has held its February base price at 25.5p/l, matching the price set by Dale Farm last week.

LacPatrick also pays 0.2p/l extra to suppliers under the Red Tractor label, bringing its base price to 25.7p/l which is just 0.1p/l behind the Dale Farm price with the 0.3p/l loyalty bonus applied. Other payments for milk quality, hygiene and transport costs apply thereafter.

Last weekend, Donegal-based processor Aurivo announced that it is also holding its February price at 25p/l. All processors have now declared their February base price with no one announcing a change on January.

Lakeland and Strathroy are also on 25p/l, while Glanbia Cheese is on a base of 25.25p/l, with Glanbia Milk/Fivemiletown holding at 25.5p/l. A full comparison of milk prices will be featured in next week’s milk league.

This week’s GDT auction was up 1.7% to US$3,101 with butter continuing to perform strongly. This was the first positive GDT auction this year with the six previous events all recording downward prices.

Commodity prices have come under pressure in recent weeks due to the fall in value of milk powders.

Whole milk powder (WMP) recorded a 2.9% increase this week, having fallen to a four-month low at the previous GDT auction.

However, the skimmed milk powder (SMP) price took a big hit this week, dropping 10.1% to an eight-month low point of $1,948.

This converts to €1,792/t, hovering just above the EU intervention price of €1,698. There are calls from within the processing sector to re-open intervention buying of SMP to remove the surplus from the market.

But the EU still has 350,000t of SMP in storage with just 40t sold to date over six individual tenders this year.

There will now be one monthly tender for this stock instead of two. The EU has clarified that there is no specific shelf life for this product, which should prevent any potential fire-sale of SMP into an already depressed market.

The Dutch prices this week also saw powders drop in value. SMP fell by €50/t to €1,700 and WMP powder fell by €80/t to €2,670. Butter increased by €60/t to €4,310.

Market outlook

At current commodity prices and exchange rates, auction prices convert to a farmgate milk price of 24p/l to 26p/l depending on the associated processing costs.

With the spring flush of milk still to come and EU production forecasted to increase by 0.6% this year, dairy markets will continue to face pressure unless there is a sharp increase in buying demand for commodities such as milk powder.