Glanbia sets August milk price
Glanbia members will see no change in August milk cheques thanks to a balancing act between base price and co-op support.

Glanbia Ireland has increased its base milk price for August, but an equivalent co-op support payment is coming to an end.

Its manufacturing price at 3.6% fat and 3.3% protein now stands at 30.4c/l excluding VAT, up 1c/l on July's level. However, there will be no 1c/l Glabia Co-op support payment this month.

Glanbia chair Martin Keane said: “The market outlook remains cautious. The level of milk supply from the main exporting regions will be a key factor determining the price outlook over the coming months.”.

On Tuesday, Lakeland Dairies announced it was holding its milk price for August.

The PPI index of dairy commodity prices compiled by Ornua showed a 3.5% increase that month.

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Strong demand for quality calved cows and heifers
We talk to Barney O'Connell of Listowel Mart to see how the dairy sales are going.

Wednesday’s dairy sale at Listowel Mart saw a good trade for quality calved cows and heifers. The clearance sale saw prices of €1,300 to €1,600 paid for cows.

Springers sold mainly from €1,150 to €1,400, while the later-calving cows running into April were a much more difficult sale, with prices of around €1,000 being achieved.

The sale of 50 heifers saw prices range from €1,300 to €1,580 for top-quality heifers, while springing heifers sold mainly from €1,150 to €1,340.

There will be more clearance sales in the mart in the coming weeks, with dairy sales every Wednesday.

Dairy markets: early outlook for milk prices in 2019 is stable
The clearance of the European Commission’s intervention stockpile has boosted dairy market prices.

It’s still early days in 2019, but the current outlook for milk prices this year is quite stable despite, the significant uncertainties presented by a no-deal Brexit.

Right now, dairy markets are in a healthy balance between supply and demand and dairy commodity prices are generally steady across the board.

When taken together, this paints a positive outlook for Irish milk prices in 2019.

Butter prices

European butter prices are in a healthy position right now and much more stable than the volatility we’ve seen over the last two years, when prices spiked to highs of €7,000/t.

Farmers might assume that record butter prices are a good thing, but such volatility has severely hit demand for butter across Europe, with butter consumption in Germany down 15% over the last two years.

Spot prices for butter reported to the Dutch Dairy Board this week stood at €4,360/t, although there are reports of Irish butter being sold at much cheaper levels just above €4,050/t.

Cheese markets

On cheese markets, prices across Europe are stable, with cheddar priced above €3,000/t. Mozzarella prices have risen to €3,100/t in the last week.

The big difference in 2019 compared with last year is the much improved health of milk powder markets.

The clearance of the European Commission’s stocks of intervention skimmed milk powder (SMP) has seen spot market prices for freshly produced SMP hit two-year highs of just under €2,000/t.

Prices for whole milk powder (WMP) have also risen in 2019 to hit €2,900/t.

Supply and demand

On the demand side of dairy markets, the Chinese appetite for dairy continues to grow. For 2018, China imported 2.8m tonnes of dairy product, which represents an 8% increase on 2017 imports.

According to Ornua, this was driven by exceptionally strong demand in the final quarter of 2018 for WMP and SMP.

However, butter, whey and infant formula demand has been weaker.

On the supply side, milk output across has Europe has been slower than expected in the early weeks of 2019.

This trend towards lower milk production among Europe’s big producers has continued into the early part of 2019

In Germany, the largest milk producer in Europe, milk production was down 1% in the last three months of 2018.

In France, the second-largest milk producer in Europe, milk production steadily fell in the second half of 2018. From October to December, monthly milk production in France was down between 3% and 4%.

There has also been a sharp reduction in milk production in the Netherlands in the last year due to significant cow culling to meet new phosphates regulations.

This trend towards lower milk production among Europe’s big producers has continued into the early part of 2019 and there is less milk being produced than expected.

Milk prices

Lower milk output in Europe, coupled with steady demand, has seen milk prices react positively in regions of Europe.

FrieslandCampina, the Dutch dairy co-op, increased its guaranteed milk price for February by 1c to 38c/litre.

This is the highest guaranteed milk price paid for February milk by Friesland in five years.

Arla, the Danish dairy processor, announced last month it was holding its February milk price for UK dairy farmer suppliers at just over 30p/litre (34.5c/litre).

Having cut its price for November and December milk, Arla said it was holding its February milk price due to improved returns from dairy markets in early 2019.

The Danish co-op said it had benefitted from stable butter prices and rising returns for SMP and cheese.

GDT soars on back of big jump in milk powder prices
The New Zealand dairy index hit its highest point in over six months thanks to strong gains in milk powder prices.

The GDT index recorded its strongest performance in over two years at Wednesday’s auction, with dairy prices jumping 7% to an average selling price of $3,265/t (€2,870/t).

Although the volume of product sold this week on the dairy auction platform was low, there were strong gains across the board for most dairy commodities.

The benchmark dairy index was led higher this week by rising prices for both whole and skimmed milk powder (WMP and SMP).

WMP prices shot up more than 8% this week above $3,000/t (€2,660/t), which is its highest price level in over six months.

On the SMP side, average prices jumped 4% to $2,535/t (€2,225/t), which is the highest level since February 2017.

On the fats side, butter prices jumped 4% to $4,445/t (€3,905/t), while anhydrous milk fat prices gained 6% to $5,580/t (€4,900/t). Cheddar prices were up just over 1% to reach $3,565/t (€3,130/t).