Glanbia Ingredients Ireland (GII) has launched two new fixed milk price schemes – a one year and a three year offering. The schemes were agreed at a Glanbia council meeting last week.While neither of the forward prices looks overly attractive, given global milk market sentiment is rising, these products are not about beating the market. The one-year price looks poor relative to where Glanbia price is now. The three-year price could still be attractive for some depending on farm costs, Brexit fall out and other unknowns. The phase eight price scheme is a three-year fixed milk price margin scheme running from 1 January 2017 and the base price is 28.61c/litre excluding VAT at 3.3% protein and 3.6% fat.
Glanbia Ingredients Ireland (GII) has launched two new fixed milk price schemes – a one year and a three year offering. The schemes were agreed at a Glanbia council meeting last week.
While neither of the forward prices looks overly attractive, given global milk market sentiment is rising, these products are not about beating the market. The one-year price looks poor relative to where Glanbia price is now. The three-year price could still be attractive for some depending on farm costs, Brexit fall out and other unknowns. The phase eight price scheme is a three-year fixed milk price margin scheme running from 1 January 2017 and the base price is 28.61c/litre excluding VAT at 3.3% protein and 3.6% fat.
Price will go up or down depending on input costs.
Market adjuster
A market adjuster will apply to this scheme so, if the base price goes above 32.06c/l excl VAT (33.73c/l incl VAT), the price will go up 0.5c/l for each 1c it goes over. The lower threshold is 26.04c/l and similarly it will go down 0.5c/l for each 1c/l under 26c/l.
The phase nine scheme is a one-year fixed milk price scheme running from 1 January 2017 to 31 December 2017 and the price is 30.2c/l excl VAT at 3.3% protein and 3.6% fat. While Glanbia will not reveal volumes available, there is likely to be plenty of volume available for both schemes as fixed schemes three and four are closing.
Is it worth applying?
The last monthly milk league price for Glanbia was 26.5c/l and that included the 1c/l co-op support. Since then, Glanbia announced it will increase that by 2c/l for November milk so that should bring the base price to 28.5c/l excluding VAT.
Setting the 2017 one-year fixed milk price at a base price of 30.2c/l for 2017 would not look that attractive (1.7 c/litre on top of November price) given market sentiment and global trends at the moment.
While it is harder to be as conclusive on how attractive the three-year price is at 28.6c/l, it has not sparked widespread confidence. However, it all depends on where markets go.
If we were to take a look back over 2015-2016, some farmers have benefitted greatly by being part of the previous fixed milk price schemes unveiled.
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