West Cork continues to lead the monthly Milk League

The September Milk League shows a similar story to the August league except a few of the processors in the lower divisions have actually dropped further.

The west Cork co-ops remain towards the top of the monthly league, paying over €3.70 per kilo milk solids. There is a large group in division two paying between €3.45 and €3.50/kg MS, which includes big players such as Kerry, Dairygold and Lakeland Dairies.

Division three now has the major player in the west, Aurivo, but also the main player in the east of the country, Glanbia.

Give or take, there is now about 0.1 of a euro per kg milk solids difference (almost 1c/litre) between divisions two and three.

Of note this month is that LacPatrick (formerly Town of Monaghan) has implemented what it announced a number of months ago – the introduction of a payment for milk in an A+B-C milk payment basis (sending the signal to their southern suppliers that higher fat and protein is what they want). They are one of the last major processors collecting milk in the south to change how they pay for milk.

October cuts

As we go to press, the majority of milk processors have announced milk prices for October which will be paid to farmers over coming days.

The major players – Aurivo, Dairygold, Glanbia, Kerry Group and Lakeland – have decided to hold milk price the same as September. Carbery, the major player in west Cork, has effectively cut milk price by 1c/litre as it is now only supporting milk price by 1c/litre instead of 2c/litre as it did for September.

Global outlook

Product price increases achieved since late August have been partially reversed and remain under pressure, especially in light of this week’s disappointing (but not unexpected) GDT results.

The strong price increases that had been seen on the GDT in recent months were driven by the expectation that New Zealand milk output would be down significantly on previous years.

Joe Collins, MD of Ornua Ingredients & Trading, said: “As GDT prices recovered, so too did the sentiment of New Zealand farmers. This more positive outlook was accompanied with better weather over the October peak-production period, making up for some of the output losses that had been seen in September.

“In recent weeks, milk supply is reportedly down just 4% on last year’s levels to end October.”

El Niño still presents a risk to New Zealand’s supplies in the high-output months of December to February. Indications are that El Niño will be strong this year, but the specific impact on New Zealand is not yet known. Best estimates from New Zealand suggest annual New Zealand milk output will be back 5% (as per New Zealand report page 36 & 37 and news pages).

Commenting on EU export performance this week, Joe Collins added: “This impressive export performance has occurred despite the very significant trading difficulties presented by the Russian import ban, China’s economic slowdown and conflict in the Middle East. However, such a positive performance alone will not be sufficient to bring about a strong, sustainable recovery in milk prices. For that to occur, we will need to see continued demand growth in our domestic European markets, and a moderation of milk output growth globally in order to reduce stocks and accommodate new flows.”

Figures 1 and 2

Figure 1 shows the difference in payout between processors for the standardised litre at 3.43% protein and 3.99% fat. It shows the difference in the 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.

You can see this month there is almost €1,000 of a difference in the September milk cheque between the processor paying top price for September and Glanbia, who are paying the lowest price.

Figure 2 shows the difference in payout between processors using the average percentage milk solids that the processor collected from their suppliers in September – ie the actual average processor solids.

There are no conditional bonuses included in this graph. If your milk qualifies for a conditional bonus from your processor the price you receive will be higher than shown on the graph.