Dairy markets have seen butter price rise sharply to stand significantly above the prices that applied at the start of April with the price gaining strength throughout May, according to Gerald Quain, chair of the ICMSA dairy committee.

He also noted price rises in WMP, SMP and cheddar over the same period.

There are a number of factors that point to a price rise:

  • The Global Dairy Trade (GDT) auctions have had five consecutive positive results leaving the index over 10% higher in the last eight weeks.
  • The standard butter/SMP combination in the Dutch quotations is returning 39.8c/l before processing costs on 24 May compared to 36.1c/l on 3 May.
  • WMP powder returns on the Dutch quotations have increased from 35.8c/l before processing costs to 38.6c/l over the same period.
  • In the GDT auctions, the butter/SMP combination is returning 38c/l before processing costs and WMP 38.6c/l before processing costs on 17 May.
  • In the UK, quoted figures show that the butter/SMP combination is returning 38.1c/l before processing costs for May.
  • At EU level and based on EU Market Observatory data, the butter/SMP combination is returning 39.2c/l before processing costs with WMP returning 40.1c/l.
  • “Certain co-ops and processors have paid up to half a cent below the Ornua purchasing price index for the first four months of the year,” Quain said. “The difference between paying 31c/l and the stated PPI price for just the first four months amounts on a farm that is supplying 350,000 litres in a year amounts to over €2,500. That’s a great deal of money to farmers still looking at a stack of 2016 bills.”

    IFA

    The IFA points to historically high butter prices and the five consecutive “bullish” GDT auctions.

    “Milk prices for Irish farmers have not increased since February, at which time EU returns, after deduction of a 5c/l processing cost, would have supported a farm gate price of 31.5c/l to 32c/l plus VAT,” IFA national dairy chair Sean O’Leary said. “Static Irish prices into April average around 30c/l plus VAT (31.6c/l including VAT), but EU returns at the end of May would support a farm-gate price of 32.9c/l plus VAT (34.7c/l including VAT).”

    Read more

    Fonterra optimistic on milk price

    Five big movers on dairy products