The ongoing and continuing rising commodity prices are taking the most seasoned milk traders and processors by surprise.

We all know the cure for high prices are high prices, but so far they have not had any impact on slowing the commodity price rise.

Of course, some would expect them to affect the trade at some stage, but all the commodities to date are continuing to rise.

New level

The supply-induced rise in dairy commodity prices is leading some to speculate that there could be a new level about to be set in terms of milk pricing at commodity, but also farmgate level.

Farmgate price in Ireland for February was close to 41c/litre ex-VAT at base solids and the most recent Ornua equivalent milk price is closer to 50c/litre ex-VAT once all is included, so most suppliers are expecting to see a rise in milk price again over the coming weeks for March milk supplies.

PPI rise

The Ornua purchase price index (PPI) for the month of March is 164.3 (46.5c/l ex-VAT) based on Ornua’s product purchase mix and assumed member processing costs of 9.7c/l.

In addition, the Ornua value payment payable to members in the month is €5.55m, which equated to 4.4% of gross purchases in the month (3.6% year to date), which equates to another 2.6c/litre equivalent of farmgate milk price, leaving the comparable milk price at 49.1c/litre ex-VAT.