Boost to July milk price

The recently announced 1c/l lift in July milk prices for Lakeland, Glanbia, Arrabawn, Dairygold and Aurivo is worth almost €500 per farm for the average Irish dairy farm. Lakeland led the charge last week with others then following afterwards.

Typically, an 80-cow herd will deliver about 12% of annual supply in July. Should the price lift remain for the rest of lactation on average the 1c/l July boost will mean a cumulative €2,000 in additional milk income given the spring-calving supply patterns on 90% of Irish farms.

Kerry Group decided not to increase milk price and instead opted to hold milk price for July.

The IFA reacted strongly following the decision. Carbery also decided to hold July price. Dairygold gave the largest increase for July going up 1.5c/l on Wednesday.

The average price for the June monthly league table was €3.20/kg milk solids (almost 22.7c/l). However, a number of the big buyers that have just lifted milk price for July paid closer to €3/kg milk solids (21c/l) for June. Hence, the average July price will be closer to 22c/l excluding VAT.

Industry sources suggest that the price increases we have seen for the last three months have yielded a gross return for the Irish product mix before processing costs of about 30c/l.

Assuming a processing cost of 4c/l to 5c/l, this would be equivalent to an early August farmgate milk price of 25c/l to 26c/l (excluding VAT) and not 22c/l to 23c/l (excluding VAT) that most Irish processors are paying.

The benchmark dairy index recorded another strong performance at this week’s auction. The GDT surged almost 13% as the recovery in dairy markets begins to gather pace.

Once again, the main driver came from whole milk powder (WMP), with average prices increasing 20%, or $430/t, to just under $2,700/t. WMP is the most important commodity traded on the GDT. Butter prices also saw strong gains.