Milk price rises to 31c/l despite ‘nervous’ market

Dairy farmers received a welcome spring boost yesterday when Glanbia Ingredients Ireland (GII), Kerry Group and Lakeland Dairies all increased their January milk price.

Kerry Group lifted its milk price by 2c/l to a base of 31c/l. Glanbia are the same base price following its lift of 1c/l, while Lakelands also increased its base price by 1c/l to 31.28c/l. All prices are VAT inclusive.

Although Glanbia chairman Henry Corbally cautioned that there remained significant uncertainty in the global dairy market outlook, he said the company would continue to monitor markets on a monthly basis.

Reacting to the price lift, Gerald Quain of ICMSA said the move was a “recognition of reality”. However, he insisted that further increases were needed to bring the Irish farmer milk price into line with the market.

Both the ICMSA and IFA had insisted there was room for price hikes in January on the back of the lift in Ornua’s PPI and last week’s stronger GDT.

The PPI increased by 1.6 to 105.4 points, which equates to 31.4c/l including VAT. Meanwhile, Fonterra’s GDT was up 1.3pc.

They also pointed out that milk production across northern Europe has been down 5pc to 12pc through the back end of 2016, while prices of 32-33c/l were being paid by Europe’s leading processors.

Quain said the ICMSA was looking for a price rise of at least 1c/l across the sector. Following yesterday’s increases, the focus will now shift to other major processors such as Dairygold and Aurivo.

“We’d be looking at a rise of 1c/l, giving an average of 31c/l for January milk,” Quain said.

“We think and trust that against the background of continuing gains and strengthening of dairy markets that co-ops will deliver the price rise that the facts support,” he added.

“EU market returns throughout December and January have exceeded 37c/l gross, equivalent to a farm gate price of 32c/l-plus,” Seanie O’Leary of IFA said.

“Milk price increases continue to be justified, and IFA will continue to lobby board members to deliver fully back to farmers what significantly stronger market returns allow,” he maintained.

However, processor sources described the market as “nervous”, with buyers not as anxious for product through January. Most observers believe buyers are waiting to see whether European milk production will hold at the current low levels or increase on the back of last year’s market improvements.

The presence of around 300,000t of SMP in EU intervention stocks is also acting as a drag on markets.