Glanbia take a positive line on milk price

GLANBIA’S decision to hold its milk price at 35c/l including VAT for January has put pressure on the other main processors to follow suit.

The boards of most of the main dairies meet this week, but any reduction in milk prices could now be stalled in the wake of Glanbia’s move.

The farm organisations have welcomed Glanbia’s decision, with the IFA’s Tom Phelan describing it as a “strong supportive message as the calving season begins in earnest.”

He maintained the three GDT auctions of 2018 had resulted in an 18pc butter price increase and a 17pc lift in whole milk powder (WMP). He said these increases, and Ornua holding their PPI at 111.3 for January should give co-ops confidence to hold January milk prices.

“While dairy returns have come back in recent months, the seasonality of Irish milk production means co-ops can comfortably hold milk prices, and they must do so for as long as possible into spring to support suppliers,” Mr Phelan maintained.

Gerald Quain of ICMSA echoed Mr Phelan’s comments and said European butter prices at €4,000/t remained historically strong.

“Demand for dairy products is positive across Europe and globally, and we still see the traditional link between strengthening oil prices and demand for dairy,” said Mr Quain.

However, one industry commentator cautioned against farmers reading too much into Glanbia holding prices.

“There is no objective reason for Glanbia’s decision unless the aim is to maintain positive farmer sentiment at this busy time of the year,” he suggested.

“The volumes of milk involved in January are also small, which means they can afford to be generous, and hope that the market has turned by the time it comes to setting the February price,” he added.