The challenge for Irish dairy farmers is that the industry will produce a good bit of skim and whole milk powder over the next number of months as milk production peaks.

The latest Global Dairy Trade (GDT) auction in New Zealand saw prices on average fall back by 6.3% to $3,512/t. Prices for skim milk powder (SMP) dropped 15.5% to $2,118/t and whole milk powder (WMP) fell by 12.4% to $2,782. Butter prices were up 1.2% to $4,653/t, while cheddar saw a drop of 4.2% to $3,435/t. This is the second consecutive fall in the GDT. Prices at the auction two weeks ago slipped by 3.2%.

There is market instability at the moment as European volumes increase and New Zealand volumes decrease. However, as revealed this week, the GDT auction only represents 12% of all powders sold internationally.

Despite the GDT fall, the Ornua PPI for February is unchanged at 105.4 (31.4c/l, VAT inclusive, based on Ornua’s product purchase mix and assumed costs of 6.5c/l). Ornua says this reflects lower SMP and butter returns in the month, offset by higher cheese and whey power prices.

European farmgate prices for January show Dutch Co-op Friesland Campina leading the charge at 33.8 c/litre, with French co-ops between 32c/l and 33 c/l, and German co-ops between 31.5c/l and 32 c/l. Fonterra is delivering a price better than most Europeans at 33.4c/litre, while the US trump the lot at 39.7c/litre for January milk.