Processors hold June price as peak milk passes

Most milk processors held May price for June so there is very little change at the top of the June Irish Farmers Journal Milk League. Drinagh did drop its price slightly (0.5 c/litre), but the rest of the west Cork co-ops held price, maintaining a firm grip at the top. The small north Cork co-op called Boherbue held its position at the top of the league, which will please its 80 or so suppliers.

Click here for pdf of milk league table.

The Glanbia Ornua bonus payout dried up, so as far as the 3,000 or so Glanbia farmers are concerned, the June cheque effectively dropped price by 1 c/litre. As a result of this they drop to the bottom of the monthly league. This Glanbia price does not include the various fixed milk price offerings (which are higher than current market prices) that some Glanbia farmers receive. However, if you supply Glanbia and don’t have any milk in voluntary fixed milk price schemes the Glanbia price is now less than 21 c/litre excluding VAT. The small co-op called North Cork also dropped price by 0.5 c/l ,which saw it drop lower in division two.

Tipperary Co-op held its place at the top of division two, which will please its suppliers as they supplemented June price with another Ornua bonus. The larger Tipperary Co-op called Arrabawn is bottom of division two but in fairness there is only 0.25 c/litre between the two Tipp co-ops.

Apart from the fact that Glanbia dropped to the bottom of division four, there is little other change in the lower divisions of the league.

The average price for the June league table is €3.20 per kilogramme of milk solids (almost 22.7 c/l). However, a number of the big buyers of milk are in divisions three and four and over 70% of the Irish milk in June delivered a farmgate price (ex VAT) closer to €3/kg milk solids (21 c/l).

Price back €30 per cow on last year

Our data shows the price in June 2015 averaged €3.74 per kg milk solids (26.68 c/litre). On average last year the June milk cheque was €11,200 for 13% of 300,000 litres supplied compared with €9,600 this year.

This means the price is back almost €30 per cow for June alone. For June that’s a drop of €3,000 in the milk cheque for a 100-cow herd.

€1,600 difference

When we compare the milk prices at the same milk solids there is over €1,600 of a difference (€27/cow) in the base June milk cheque comparing the west Cork co-ops and Glanbia at the bottom. Figure 1 shows the difference in pay out between processors for the standardised litre at 3.49% protein and 4.11% fat supplied during the month of June. It shows the difference in the June milk cheque for a supplier with a normal seasonal Spring supply curve (13% in June) for a farm that will produce 300,000 litres (66,000 gallons) in the year.

Actual price paid out

Figure 2 shows the difference in the actual June milk cheque for the different milk solids collected from each of the different processors. What do I mean by ‘actual’? 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 Boherbue top of this graph once again for June.

Interestingly, Dairygold and Aurivo had the best average milk solids for June at 7.33% (combined fat and protein). However, low base milk prices paid out by both mean they stay well down this graph when we compare processors on ‘actual’ price paid out.

LacPatrick had the worst June milk solids at 6.98%. There is very little difference compared with 2015 – in June 2015 Dairygold had the best June solids again at 7.35% combined while in June 2015 Monaghan had combined solids of 7.02%.

June premium

I know individual farmers that delivered over 8% solids for June and that better milk solids delivered a 2 c/litre premium over co-op average milk solids. That is the premium that is so worthwhile in these low price times and the reward for good breeding and good grassland management. It,s €15 per cow extra for one month of supply for doing very little different other than milking better quality cows.

International league

The international May league shows the French and US players paying between 28 and 30 c/kg for May. The large Dutch player FrieslandCampina pays 24.4 c/kg as it committed to holding that price for three months earlier in the year. German and the large New Zealand based co-op Fonterra are paying close to what the Irish are paying between 21 and 22 c/litre.

Note our monthly milk league table shows June prices while the only international prices available are those for May. We will publish the June international prices next week.