While the early price setters among the Irish co-ops dropped milk price again this week and did the groundwork for further price drops later this month, international dairy markets are holding up well.

Butter prices on the European spot market increased by €45/t this week and whole milk powder (WMP) increased by €35/t. These price gains are on top of previous gains last week and follow in the wake of two consecutive gains in the Global Dairy Trade (GDT) auction.

It wasn’t all good news though, with the spot market price for cheddar falling by €30/t this week and skim milk powder (SMP) by €35/t.

Demand for both of these products seems low, as they have not gained in price in recent weeks.

Processors that have a strong reliance on cheddar within their product portfolio will be hoping this changes soon.

The Ornua purchase price index (PPI) for the month of April is 126.7, down from 136.8 in the previous month.

After deducting processing costs, but before a processor margin, the Ornua basket of goods generated per litre of milk implies an indicative return of 37.98c/l excluding VAT but including the Ornua value payment.

The fall in the PPI is inevitable given where international dairy markets have been and where they are now. What milk price Irish farmers will receive will be based on the specific products produced by the co-op, what they sell them for and what other supports they can add to the price. Based on this result and the typical costs of production, the margin from dairying this year will be low.