ICOS slams increased US butter tariffs
ICOS says the move sends a bad signal to the European agriculture industry ahead of further planned TTIP negotiations.

ICOS, the Irish Co-operative Organisation Society, has slammed the recent decision by US authorities to increase the import tariff for butter by almost a third, or $0.51/kg, saying the move does not match the US supposed stance of opening free trade between Europe and the US.

The increased tariff comes into effect immediately, meaning the current tariff for Irish butter exports entering the US now stands at $2.05kg.

The tariff affects all countries without a free trade pact with the US and will run to at least the end of December 2015.

ICOS said there was no warning or no consultation carried out with European authorities in the lead-up to the tariff increase and that the “punitive tariff flies in the face of the US government’s stated positions on the matter”.

ICOS says it has raised the issue with officials, both in the European Commission and also in the World Trade Organisation.

“While the move does indeed seem to be legal, it certainly does not match the US rhetoric of opening free trade between Europe and the US, and certainly sends a bad signal in agriculture as the TTIP negations are set to ramp up a gear,” ICOS said in a statement.

Kerrygold

The move will almost certainly have an immediate impact on the Kerrygold brand in the US, the Irish dairy industry’s key product in the US market.

Ornua, which markets the Kerrygold brand in the US on behalf of the Irish dairy industry, recently announced that Kerrygold is the number three branded butter in the US and was on track for volumes sales growth of 30% this year.

As such, ICOS say the decision by US authorities to increase the import tariff on butter is all the more galling when the price of US butter remains incredibly robust.

Domestic demand and consumer consumption of butter and cheese in the US has been exceptionally strong this year. This has insulated US prices for these commodities in comparison to the price declines butter and cheese have seen in other parts of the world.

Important market

With the Russian market now closed, EU dairy exporters have increased their focus on the US market over the last year. The latest figures from the EU Milk Market Observatory indicate that EU exports of butter to the United States have almost doubled during the first seven months of 2015. With over 8,900t of butter exported during that period, the US is now the second largest destination for European butter and closing in rapidly on the number one spot occupied by Saudi Arabia.

Dairy markets: GDT records eighth decline in last 10 events
Weakness in milk powder prices dragged the GDT index to its lowest level in almost two years.

The GDT dairy index recorded its eighth decline out of the last 10 events at this week’s dairy auction in New Zealand.

The index fell a further 1.3% at this week’s auction, with just over 39,000t of dairy product sold.

The benchmark dairy index is now at its lowest point since October 2016, with continued weakness in the price of milk powders dragging the GDT lower over recent months.

The price of whole milk powder (WMP), which accounts for over 50% of all the product traded on the auction platform, fell a further 2% at this week’s auction to just under $2,770/t (€2,370/t).

WMP prices as traded on the GDT platform have fallen at nine of the last 10 auctions and are now at their lowest point in over nine months.

Similarly, the price of skimmed milk powder (SMP) weakened by just over 1% this week to $1,980/t (€1,695/t).

Butter

Butter prices were flat at this week’s GDT, holding at $4,270/t (€3,655/t).

As you can see, New Zealand butter is priced far lower than European product.

According to the Dutch Dairy Board, butter prices in Europe dropped 5% on last week to €5,250/t.

Spot prices for butter reported by dairy traders in Europe are ranging from €4,800/t to just over €5,000/t, as the market continues to correct slightly. Demand for butter remains strong and supplies are tight on the continent, which should underpin prices into the back end of the year.

LacPatrick and Arrabawn set milk prices
Two more co-ops have decided to hold their August prices.

LacPatrick and Arrabawn co-ops have set their milk price for August, sppokespeople for both co-ops told the Irish Farmers Journal.

LacPatrick's price remains unchanged. In the Republic of Ireland, the cross-border co-op's suppliers will receive a base price of 30.36c/l (excluding VAT). In Northern Ireland, LacPatrick's price stays at 27.5p/l.

Meanwhile, Arrabawn has incorporated the 1c/l drought bonus it was paying in previous months into its base price, to give a new base of 30.56c/l excluding VAT.

Glanbia made a similar decision to include a previous co-op bonus into its base price.

Most co-ops have now held their August prices, with the increase in Aurivo's price the exception.

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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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Glanbia announces new equipment fund

Milk supplies bounce back for August

Milk prices: PPI jumps in August