Cuts to the October milk price have seen LacPatrick and Aurivo slip down out of division two and into division four below the €4.20/kg threshold.

This is the first real slip in milk price for a number of months. While other processors have mentioned in press releases that market conditions have deteriorated, all have held milk price.

The positioning at the top of the milk league hasn’t changed from September, with the west Cork co-ops remaining on top. The gap has widened further between top and bottom, with the gap now €4.63 per kilo at the top compared with €4.17 per kilo at the bottom of the league. That’s over 0.45c/kg milk solids of a difference, which is 3.5c/l in old money.

While October supply for most farmers is reducing, the fact remains that for this month alone the difference in milk price means there is €1,400 less in the milk cheque. The other big player up the North and west is Lakeland Dairies and it has reinforced its position in division two and the October price includes a 0.28c/l lactose bonus that all milk over 4.35% lactose achieves. In old money, it means there is a 2 c/l gap between LacPatrick and near neighbours Lakeland who have secured a merger deal that got shareholder approval and is now awaiting competition authority approval.

Remember, conditional bonuses are not included in this league ranking as the objective is to try to compare the prices on a like-for-like basis. So the farmer might actually get more in the milk cheque if he/she meets all the quality requirements.

In division two, Lakeland and the small north Cork trader Boherbue hold the middle ground ahead of the big players Kerry, Dairygold, and Glanbia.

Division three contains all the milk processors with a milk price under €4.30/kg milk solids. Of the big players, Kerry leads the third division, just slightly ahead of Dairygold and Glanbia. There really is very little between these three big players. They remain over 0.3 c/kg MS (2.5 c/l in old money) behind the west Cork co-ops.

The bottom line is the gap that was there in September has widened for October. As you can see in Figure 1, if we use the national average figure to compare between co-ops, the Drinagh milk cheque for October comes in at €14,399 for the average herd while Aurivo and LacPatrick fall under €13,000 for the month. Remember, October milk supplies were probably 20% ahead at least compared with the same month in 2017.

Average October price

The average price for the main table is €4.36/kg MS which is equivalent to about 31.0 c/l at 3.3% protein and 3.6% fat ex VAT. Weighted for volumes per processor (because only 5% of national milk is in west Cork), the average is probably closer to €4.28/kg MS so, in effect, the base price ex VAT at 3.3% protein and 3.6% fat is closer to 30c/l.

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