The latest milk price indicator (MPI) from the Ulster Farmers Union has fallen 0.58p to 27.99p/l. Allowing for a deduction of approximately 2p/l to cover a processor margin and transport costs, it would bring the MPI closer to an approximate farmgate price of 26p/l.

The reduced MPI is reflective of the latest downward trend in dairy commodities markets with the GDT and Dutch Dairy Board auctions facing price pressure.

This week’s GDT auction recorded a small price index drop of 0.3% to US $2,885/t. It is the fifth auction in a row to record a negative outcome. The index price has fallen by 15% since June.

Allowing for exchange rates, the latest index would convert to a milk price of approximately 28p/l before processing costs.

While butter rose 2.4% and skim milk powder was unchanged, whole milk powder and cheddar prices fell.

Industry analysts point to increased production levels in Europe, and a strong start to the production year in New Zealand, as being key factors in reducing the demand for dairy commodities.

Meanwhile, the council of EU agricultural ministers announced earlier this week that there will be no fixed price intervention scheme for skim milk powder during 2019.

Intervention had been set at €1,698/t and last used in 2017 as a method of removing a surplus of milk powder from the market. However, there is little appetite from the EU for another intervention scheme.

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