August milk prices took a significant tumble and most co-ops dropped milk prices down 2c/l for August milk supplies. This means close to 25c/l has been taken off milk price since January.
With the league average now at 33.1c/l, it means the majority of milk produced is selling for below the cost of production.
After three to four months of reductions in the New Zealand-based GDT auctions, the two September auctions have bounced up building farmers’ hopes that we have at least reached the bottom on milk price. Co-op boards will meet in the next two weeks to set September milk prices.
The west Cork co-ops, Arrabawn, and the small north Cork co-op, Boherbue, hold the top positions in August all paying over 34c/l in old money at base solids or over €4.80/kg milk solids.
Kerry, Tipperary and North Cork take up division two, paying 33c/l at base. Most of the milk is in division three with Aurivo, Lakeland, Tirlán and Dairygold.
Division three milk is making between 31.5c/l and 32.5c/l or €4.50/kg milk solids. It means most of the milk is between 2.5c/l and 3c/l below what Arrabawn and the west Cork co-ops are paying in division one. The cumulative column (year-to-date payout) gives an idea of the gap that is developing between the west Cork co-ops and the big players.
The west Cork co-ops are hitting over €168,000, while the those co-ops at the lower end are closer to €158,000 paid out year to date when we compare all the co-ops at the same solids.
Global and European dairy markets would suggest the tide is turning on dairy commodities, so farmers will want to see that in milk price very soon given the rate of decline since the start of the year.