Butter and powders are increasing in price, which should result in higher milk prices to farmers.
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It’s a positive story once again on dairy commodities this week. The Irish slant on that this week is that the Ornua purchasing price index (PPI) for September increased slightly to 103.8, up from 103.5 in August.
Ornua (formerly the Irish Dairy Board) said this reflects stable butter and cheese prices and improved powder returns. The milk price equivalent is 29.3c/l ex-VAT (30.9 c/l including VAT) based on Ornua’s product purchase mix and assumed costs of 6.5c/l.
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As most of the August milk was purchased closer to 27c/l ex-VAT, the IFA has come out strongly this week suggesting a number of critical issues that are wrong with the current Irish milk prices. It suggests: (1) Irish milk prices are lagging behind EU prices; (2) the gap between the top Irish players and the bottom players is widening; and (3) commodity prices are improving for the last six weeks. In the last month, EU prices show butter up €100/t, skim powder up €140/t, whole milk powder €130/t and cheddar up €40 to €60/t.
So if prices are firming, what other reasons have a big impact on prices? Supply is the big issue. The supply side for the big European players – namely France, Germany and the Netherlands – is negative. France is back 1.1% compared with the same period last year, Germany is back 0.7% and the Netherlands is back 2.6%. There are some positive supply trends in some of the second-tier players – the UK is up 2.6% and Poland is up 2.1%. On a global scale, the US is on par or slightly up while New Zealand is in early season but is also up.
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It’s a positive story once again on dairy commodities this week. The Irish slant on that this week is that the Ornua purchasing price index (PPI) for September increased slightly to 103.8, up from 103.5 in August.
Ornua (formerly the Irish Dairy Board) said this reflects stable butter and cheese prices and improved powder returns. The milk price equivalent is 29.3c/l ex-VAT (30.9 c/l including VAT) based on Ornua’s product purchase mix and assumed costs of 6.5c/l.
As most of the August milk was purchased closer to 27c/l ex-VAT, the IFA has come out strongly this week suggesting a number of critical issues that are wrong with the current Irish milk prices. It suggests: (1) Irish milk prices are lagging behind EU prices; (2) the gap between the top Irish players and the bottom players is widening; and (3) commodity prices are improving for the last six weeks. In the last month, EU prices show butter up €100/t, skim powder up €140/t, whole milk powder €130/t and cheddar up €40 to €60/t.
So if prices are firming, what other reasons have a big impact on prices? Supply is the big issue. The supply side for the big European players – namely France, Germany and the Netherlands – is negative. France is back 1.1% compared with the same period last year, Germany is back 0.7% and the Netherlands is back 2.6%. There are some positive supply trends in some of the second-tier players – the UK is up 2.6% and Poland is up 2.1%. On a global scale, the US is on par or slightly up while New Zealand is in early season but is also up.
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