Milk price rises in Europe
Leading milk processors across Europe are applying milk monthly price increases of 1c/l or more.

Arla Foods has announced a 1c/l increase in August for its 12,700 suppliers stretching from Sweden to the UK. Johnnie Russell, director of the co-op’s UK branch Arla Foods amba, said this would translate into a 0.81p/l increase for British farmers to 29.98p/l.

““The current market situation is characterised by strong demand and low stocks of fat and this is driving up prices for products containing fat,” Russell said. “Meanwhile, the protein market remains stable, however at a low level.”

Müller, another continental co-op collecting in the UK, said would raise its British price by 1.5p/l in August.

Three months of increases for Lactalis

In France, Lactalis, the world’s third largest milk processor, has announced a series of 1c/l monthly rises for the 5.6bn litres it collects annually in its home country. This will take the price to 34c/l in July, 35c/l in August and 36c/l in September at 4.1% fat and 3.3% protein.

“This evolution was expected by milk suppliers following the real difficulties of 2016 and must be matched by an increase in the price of our products,” said Lactalis group managing director Daniel Jaouen, hinting at tension on dairy prices across the supply chain from farmers to retailers in recent weeks. He added the new price was negotiated with producers’ organisations.

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LacPatrick sets July milk price
The board of the cross-border co-op met this Monday to decide a price increase for July milk supplies.

In the Republic of Ireland, LacPatrick's suppliers are getting a 1c/l price increase resulting in a July base price of 30.36c/l (excluding VAT).

In Northern Ireland, LacPatrick's price is increasing by 1p/l to 27.5p/l.

The boost will be all the more significant to farmers in the LacPatrick catchment area after favourable weather conditions there resulted in the co-op reporting a 2% increase in milk collections last month.

Neighbouring Lakeland also increased its July price by 1c/l amid growing supplies. The two co-ops are currently holding merger talks.

Increased supply in the north and west was in contrast with the south and east, where July production was down following more severe drought.

Milk processors have so far either increased or held prices for July supplies.

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Dairy markets: butter prices continue to firm on tight supplies
Dairy processers in Europe are reacting to the high price of butter with production up across a number of countries.

Spot prices for butter continued to firm over the last week as supplies remain tight across Europe. According to the Dutch dairy board, spot prices for butter gained by a further €100/t, or 2%, in price over the last week to hit a six-week high of €5,550/t.

Skimmed milk powder (SMP) prices also made gains this week, with spot prices reported to the Dutch dairy board jumping 4% in the week to €1,550/t – the highest since late June. Europe’s butter market has continued to firm for much of 2018 despite recent figures showing a strong increase in butter production in a number of large dairy-producing EU member states.

In Ireland, butter production for the first five months of the year (Jan-May) stood at 89,400t, which is more than 3% ahead of the same period last year. Since the end of quotas, Ireland has grown to become the third-largest butter-producing country in Europe, pumping out close to 230,000t per annum.

In France, Europe’s second-largest butter producer, production for the first five months of 2018 is up more than 5% year on year at 202,000t. It’s a similar story in the Netherlands, where butter production from January to May rose almost 6% to 64,100t.

Interestingly, butter production in Germany, Europe’s largest producer, is down more than 2% in the first five months of 2018 to 215,700t. Across the 28 EU member states, butter production in the first five months of 2018 is estimated to be up almost 2% year on year to 945,800t.

Dairy markets: butter production surges in Ireland, France and the Netherlands
Dairy processors in Europe are reacting to the high price of butter, with production up across a number of countries.

Butter production in a number of large dairy-producing EU member states surged ahead in the first half of 2018, as processors reacted to the high price of butter. In Ireland, butter production for the first five months of the year (January to May) stood at 89,400t, which is more than 3% ahead of the same period last year.

Since the end of quotas, Ireland has grown to become the third largest butter-producing country in Europe, pumping out close to 230,000t per annum.

In France, the second largest butter producer in Europe, production for the first five months of 2018 is up more than 5% year-on-year at 202,000t. It’s a similar story in the Netherlands where butter production from January to May this year rose almost 6% to 64,100t.

Sliding down

Interestingly, butter production in Germany, Europe’s largest producer, is down more than 2% in the first five months of 2018 to 215,700t. Germany typically produces close to 0.5m tonnes of butter per annum.

Across the 28 EU member states, butter production in the first five months of 2018 is estimated to be up almost 2% year on year to 945,800t.

Despite the strong increase in butter production across many large dairy-producing EU member states, butter stocks in storage or warehouses are still estimated to be minimal. This shortage in stocks has underpinned much of the price volatility that has characterised butter markets in the last year.