Most milk processors held milk price for July.
There had been an expectation that processors would lift milk price to meet market returns.
The green line in Figure 1 shows the equivalent price Ornua got from the market for the last seven months. Underneath that is a red line showing the average milk price paid by the processors for each month.
We can see the monthly gap and when we add that up and model it on a 500,000l seasonal supplier, it means the average price paid was €60 per cow lower than the equivalent price Ornua publishes monthly.
The processors don’t sell all their product through Ornua, but the majority is sold this way. If not selling it via Ornua, then maybe they should be given the Ornua returns?
Kerry held its milk price at the same level it paid in June. However, it paid out a flat 0.95 c/l milk price ‘top-up’ (1c/l inc VAT) which it says was in line with its milk contract commitment. Obviously Kerry has been watching what the other milk processors have been paying in this exercise and decided that now is a good time to make an additional payment to its suppliers.
If we take the typical supply curve for Kerry and exclude the milk contracted at a fixed milk price, then it would look like Kerry paid out close to €1.4m in the July ‘top-up’.
North Cork co-op, near neighbours of Kerry Group, caught the ‘July top-up’ bug and also paid out a July milk price ‘top-up’ of 0.5c/l.
Lakeland Dairies continues to set the pace if we look past these summer ‘top-ups’. You could throw a blanket across the rest except for the small Boherbue co-op which stays down at the foot of the table.
A steady GDT and milk supply deficits across the big milk countries in Europe (see more online) are underpinning market returns as we head into September.