Ir­ish but­ter prices on a slip­pery slope

Quotes here are €880 lower than rates be­ing paid by Dutch deal­ers

Irish Independent - Farming - - NEWS - LOUISE HO­GAN

BUT­TER prices are lag­ging be­hind Dutch quotes by €880 a tonne as global de­mand for dairy fats re­mains buoy­ant.

Dutch deal­ers are quot­ing but­ter at €6,800 a tonne com­pared to €3,500 a year ago — a 94pc rise

Whole milk pow­der has also risen 35pc from €2,300 to €3,100 a tonne, while the in­ter­ven­tion mea­sures for skimmed milk pow­der have helped steady that mar­ket.

With the strength­en­ing of the dairy mar­ket, the ICMSA’s Ger­ald Quain said there was a “hugely con­cern­ing gap” open­ing up be­tween Ir­ish dairy prices and those of main­land EU pro­duc­ers.

“Ire­land is cur­rently only in 12th po­si­tion of the EU in terms of milk price,” said Mr Quain, not­ing that Fon­terra, who are geared to­wards com­mod­ity prices, are pay­ing more than Ir­ish co-ops.

“The in­ter­nal mar­ket price of but­ter within the EU presently shows Ir­ish but­ter prices lag­ging Dutch quotes by a stag­ger­ing €880 per tonne.”

He pointed out the lat­est EU Milk Mar­ket Ob­ser­va­tory re­port also placed Ir­ish but­ter prices at €200 per tonne be­low the EU av­er­age.

“How can such a dis­par­ity ex­ist when Ir­ish pro­duce is of the high­est pos­si­ble qual­ity and trace­abil­ity through the Sus­tain­able Dairy As­sur­ance Scheme and a global brand leader in the form of Ker­ry­gold but­ter?” he ques­tioned.

Or­nua has al­ready cau­tioned that the sharp rise in but­ter prices can also have im­pacts on the long-term trade by push­ing restau­rants and pro­duc­tion fa­cil­i­ties to­wards cheaper fats such as mar­garine.

With dairy mar­kets con­tin­u­ing to per­form strongly, the farm bod­ies have been calling for a sub­stan­tial price rise for Au­gust milk.

The IFA’s dairy chair Sean O’Leary said on the ba­sis of con­tin­u­ing strong EU av­er­age re­turns, a min­i­mum in­crease of 1c/l for Au­gust milk was ex­pected.

He pointed out the EU prices were be­ing car­ried by his­tor­i­cally high and still ris­ing but­ter prices which hope­fully should trans­late into a firmer Or­nua PPI for the month.

“Ac­cord­ing to the Dutch farm or­gan­i­sa­tion LTO’s monthly Euro­pean milk price league for July, Ir­ish milk prices as re­ported are around 1c/kg short of the Euro­pean av­er­age,” Mr O’Leary said.

“EU MMO re­turns for the week end­ing 28th Au­gust have risen to 41c/l be­fore pro­cess­ing costs — equiv­a­lent to 36c/l + VAT. Re­mark­ably, this is off the back of an av­er­age EU but­ter price now ex­ceed­ing €6,000/t (€6,180/t), and a WMP price, at €3,120, clearly also ben­e­fit­ing from higher but­ter­fat prices,” he said.

He pointed out that be­tween 35 to 40pc of Ir­ish farm­ers’ milk pro­duc­tion is de­liv­ered be­tween Au­gust and De­cem­ber.

It fol­lows a 9pc in­crease in the milk flow­ing through the pipes of cream­eries in July, with 856 mil­lion litres col­lected.

So far this year the milk pool is up by over 7pc.

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