Milk league: international price surge lifts autumn prospects

With seasonal Irish supply on the downward spiral, thankfully for farmers prices are on the way up. Jack Kennedy reports

Jack Kennedy

2 November 2016

Milk league: international price surge lifts autumn prospects

September milk league averaged 3.54 cents/kg milk solids (25.1 c/litre) excl VAT & conditional bonuses

West Cork Co-ops continued to lead the way in September as they lifted base price similar to the majority of the big players in Division 2. At the other end of the league, LacPatrick and Lakeland bring up the rear, paying close to €3.41/kg MS, almost 0.30c/kg MS less than the west Cork Co-ops.

West Cork Co-ops continued to lead the way in September as they lifted base price similar to the majority of the big players in Division 2.

At the other end of the league, LacPatrick and Lakeland bring up the rear, paying close to €3.41/kg MS, almost 0.30c/kg MS less than the west Cork Co-ops.

In fairness to LacPatrick and Lakeland, they are not that far behind the big players, Kerry, Dairygold and Glanbia, who are all paying between €3.44 and €3.48/kg MS.

The average September milk league price is 3.54c/kg MS (25.1c/litre excluding VAT at 3.49% protein and 4.11% fat). On average, the price rose 0.15c/ kg MS (up 1c/l) on August prices. This price excludes bonuses available for lower somatic cell counts.

The September price rises come in response to rising market values for butter and cheese. This week, the GDT, which gives us some transparency on whole milk powder prices, rose 11%.

Also this week, FrieslandCampina rose the base November price by 3.75c/l to 33c/kg (remember the league shows September).

In a statement, FrieslandCampina said the positive development of the milk price is caused by increasing quotations, mainly for cheese and butter.

When we compare the milk prices at the same milk solids, there is over €626 of a difference in the base September milk cheque comparing the west Cork Co-ops and the midland and northern co-ops at the bottom.

Difference

Figure 1 shows the difference in payout between processors for the standardised litre at 3.49% protein and 4.11% fat supplied during the month of September. It shows the difference in the September milk cheque for a supplier with a normal seasonal spring supply curve (9% in September) for a farm that will produce 300,000 litres (66,000 gallons) in the year.

Figure 2 shows the difference in the actual September milk cheque delivered. When I say actual, I mean the money paid out for the different milk solids collected from each of the different processors.

Quality pays

Milk processors collect milk that varies in fat and protein percentage, so in effect the quality of milk goes some way to deciding the milk price paid out. The processor can’t pay top price if the quality is poor. The higher the milk solids (fat and protein), the higher the milk cheque.

Farmers should be rewarded for better milk solids, so if a processor is getting less milk solids it will pay a lower price and rightly so as it can make less product from that milk. The combination of good milk price and good milk solids puts Drinagh top of this graph for September.