LTO report
In this report developed by LTO the following characteristics of the standard milk are taken as a basis: 4.2% fat; 3.4% protein; TBC 24,999 per ml; SCC 249,999 per ml; Annual delivery 500,000 kg. The prices are exclusive of VAT, ex-farm and inclusive of supplementary payments.Last week the KPMG/IFJ Milk Price Review is based on actual milk fat and protein delivered represented as cents/litre not a standardised kilo of milk as per the LTO.
On an international level the map above shows that 2017 was a relatively good milk price year. The average milk price has only been higher in 2013 and 2014. It is fair to say after a slow start, 2017 was a good year for the dairy market, characterized by record fat prices and very low protein prices.
On the positive side the consumption of fat-related dairy products like butter increased structurally as the result of a more positive consumer perception. However, on the downside there was also a protein surplus, which was evident from high stock levels of skimmed milk powder in the EU and US.
When compared on a like-for-like basis, the Irish milk prices that are part of the LTO come in between 2c/l and 4c/l lower than the big European players Arla and Friesland-Campina in Denmark and Holland respectively.
For all the big European players, the milk price rose substantially from 2016. Arla milk price increased by over 28%, DMK from Germany increased by 43% while the French prices more or less held steady. Milk prices calculated by the French dairy companies are below average, which corresponds with the situation evident in previous years. In good milk price years, French milk prices are lower than average, while the opposite is the case in relatively poor years.
The milk price calculated of the New-Zealand Fonterra company for calendar year 2017 increased by 15.9% to €32.02 per 100kg of milk. It should be observed that the Fonterra milk price season runs from June 1 to May 31 inclusive. The milk price for the current season – 2017/18 - will only be finalized in September 2018. The milk price calculated for 2017/18 is based on the most recent forecast (NZ$6.75 per kg of fat and protein (milk solids (MS)) and an estimated dividend of NZ$0.175 per kg of MS (a total of NZ$6.93 per kg MS). The so-called Class III price from the US gives a good indication of how milk prices are developing there. Although the milk price has increased less than in Europe, the milk price calculated by the US (€36.22) is higher than the average for EU dairy companies. Expressed in dollars per hundredweight (cwt = 45.36 kg), the milk price increased from $14.87 in 2016 to $16.17 in 2017. For 2018, the USDA forecasts a Class III price of between $14.80 and $15.30 per cwt (average = $15.05 per cwt) and 2019 $14.80 to $15.80 (15.30) per cwt.
Another key point to mention is that milk price paid by the international companies is only part of the picture, similar to the Irish scenario. We must also take into account the development of the businesses and the investment in future markets and research.
LTO report
In this report developed by LTO the following characteristics of the standard milk are taken as a basis: 4.2% fat; 3.4% protein; TBC 24,999 per ml; SCC 249,999 per ml; Annual delivery 500,000 kg. The prices are exclusive of VAT, ex-farm and inclusive of supplementary payments.Last week the KPMG/IFJ Milk Price Review is based on actual milk fat and protein delivered represented as cents/litre not a standardised kilo of milk as per the LTO. On an international level the map above shows that 2017 was a relatively good milk price year. The average milk price has only been higher in 2013 and 2014. It is fair to say after a slow start, 2017 was a good year for the dairy market, characterized by record fat prices and very low protein prices.
On the positive side the consumption of fat-related dairy products like butter increased structurally as the result of a more positive consumer perception. However, on the downside there was also a protein surplus, which was evident from high stock levels of skimmed milk powder in the EU and US.
When compared on a like-for-like basis, the Irish milk prices that are part of the LTO come in between 2c/l and 4c/l lower than the big European players Arla and Friesland-Campina in Denmark and Holland respectively.
For all the big European players, the milk price rose substantially from 2016. Arla milk price increased by over 28%, DMK from Germany increased by 43% while the French prices more or less held steady. Milk prices calculated by the French dairy companies are below average, which corresponds with the situation evident in previous years. In good milk price years, French milk prices are lower than average, while the opposite is the case in relatively poor years.
The milk price calculated of the New-Zealand Fonterra company for calendar year 2017 increased by 15.9% to €32.02 per 100kg of milk. It should be observed that the Fonterra milk price season runs from June 1 to May 31 inclusive. The milk price for the current season – 2017/18 - will only be finalized in September 2018. The milk price calculated for 2017/18 is based on the most recent forecast (NZ$6.75 per kg of fat and protein (milk solids (MS)) and an estimated dividend of NZ$0.175 per kg of MS (a total of NZ$6.93 per kg MS). The so-called Class III price from the US gives a good indication of how milk prices are developing there. Although the milk price has increased less than in Europe, the milk price calculated by the US (€36.22) is higher than the average for EU dairy companies. Expressed in dollars per hundredweight (cwt = 45.36 kg), the milk price increased from $14.87 in 2016 to $16.17 in 2017. For 2018, the USDA forecasts a Class III price of between $14.80 and $15.30 per cwt (average = $15.05 per cwt) and 2019 $14.80 to $15.80 (15.30) per cwt.
Another key point to mention is that milk price paid by the international companies is only part of the picture, similar to the Irish scenario. We must also take into account the development of the businesses and the investment in future markets and research.
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