A 0.5p/l increase to 30.08p/l has brought the UFU milk price indicator (MPI) to its highest level for 27 months.
Allowing for a conservative deduction of 2p/l for transport and processor margins, the current MPI suggests that markets can support a milk price above 28p/l during early 2021.
The indicator is calculated using auction prices from the New Zealand GDT and Dutch Dairy Board events, plus the “actual milk price equivalent” and “cheese for milk price equivalent” published by the Agriculture and Horticulture Development Board in Britain.
Since the 15 September 2020, there have been 10 GDT auctions, of which nine have recorded price increases. Market prices have been buoyed by increased demand for protein from Chinese buyers.
European markets have tracked along similar trends with noticeable gains in butter, and whey powder reaching its highest level since June 2017.
The MPI is at its highest level since 19 October 2017, when NI base prices were in the region of 29p/l, excluding winter bonus payments.
South of the Irish border, the Ornua Purchasing Price Index (PPI) is also on an upward trajectory, hitting 107.3 at the start of the month.
This equates to a farmgate milk price of 32.04c/l (ex VAT) for January. At current exchange rates, this converts to a sterling milk price of around 28.5p/l.
For milk suppliers in Scotland, after a recent cut of 1.2c/l by Arla Foods, the company has pointed to steady demand for product, so committed to maintain February manufacturing standard litre price at 29.58p/l with the liquid standard litre price at 28.50p/l.
First Milk has announced no price change for February with a liquid standard litre price at 28.00p/l, while the manufacturing standard litre has held at 28.93p/l. It is holding at the same price for March supplies.
Müller Direct has kept its price for February at 27p/l. For liquid contracts, Müller members supplying the co-op will get a 0.22p/l price increase taking their price to 29.88p/l, while Müller Tesco suppliers are getting a 0.40p/l price rise to 31.27p/l. Arla suppliers to Tesco will get 31.02p/l for February milk.