ICMSA expect Aurivo to be part of ‘price rise trend’
SPEAKING after the round of January price announcements by Glanbia and Lakelands which saw movement upwards, ICMSA Dairy Chairperson, Ger Quain, said that the association was “very confident” that the trend of price rises will continue despite some backsliding evident in the latest GDT. Mr Quain said that the he considered it to be “very realistic” for the processors to continue closing the gap between their own Co-op prices and the Ornua PPL and referencing the last GDT he described the fall as being attributable to external factors would recede and allow the strong market fundamentals to reassert themselves over the next two quarters.
“Prices have increased on the back of lower supplies across the European continent and across all the major dairy products, Dutch dairy quotes are showing a 6cpl increase in the standard Butter/SMP mix since its lowest point in 2019 while WMP is up over 3.5cpl since then. Current Dutch dairy quotes show the SMP/Butter combination at 35.1 cpl after processing and VAT included and WMP at 35.4cpl. Farmers are looking at those prices in the context of the Ornua PPI which stands at 33.6cpl for January and which has been consistently higher than the prices paid to farmers – much to their irritation. Actually the Ornua PPI tracked the market trend over the course of 2019 where the individual Co-ops did not and we’re very confident that the Co-ops are being made aware of the gap that still exists by their farmer-suppliers. The recent volatility in the GDT can be explained through weather and Coronavirus having to be factored into pricing. That will right itself as has been demonstrated by the fact that volatility in the GDT market has been minimal since 2016 and had not varied by more that 250 basis points in those years compared to a range of 1000 basis points between 2013 and 2015”, said Mr Quain.
“We expect a series of milk price rises by Co-ops to run up to- and through – peak production and we certainly expect Aurivo to be part of that trend”, said Mr Quain.