Milk auction price moves up
THE average price at this month’s United Dairy Farmers milk auction increased by almost 1.5 pence to average close to 23 pence per litre.
“This increase in auction prices will be welcome news to all dairy farmers coming after a period of falling market returns and milk prices. However we recognize that further price increases are needed so that farmers can cover their costs,” United Group Chief Executive David Dobbin told Farming Life.
“Whilst international dairy returns have stabilized and powder and butter prices are edging up, markets are still very fragile with record milk production home and abroad together with a very weak Euro both putting downwards pressure on returns. This week’s auction price was well ahead of the returns from the last Fonterra auction, which were equivalent to a milk price of under 19 pence a litre.
“It has been an unusual season for milk production,” added Mr Dobbin.
“Supply growth was slower than normal in April and early May, but the good weather at the end of May gave a late surge in grass growth and milk production. Overall milk supplies in Northern Ireland in May were the highest ever recorded and 4% ahead of last year. That growth has continued into June and in this week’s auction we sold more July milk than initially planned - and more than in last month’s auction which is very unusual.”
Mr Dobbin continued: “Providing there are no unforeseen circumstances and the exchange rates do not further deteriorate we would expect to see auction prices move up further in the months ahead. United’s auction price is seasonal and as local milk supplies reduce prices should move up. New Zealand is now entering its winter and largely out of the market, and supplies in the EU and US are also reducing seasonally. However, the international market remains finely balanced, with increased stock levels, and next testing point is likely to come when Southern Hemisphere production starts again in early autumn.”
In this month’s auction 47.5 million litres of milk were sold for June delivery at an average price of 22.98 pence per litre, compared to an average price of 21.53 pence at last month’s auction, and 27.91 pence in the June auction last year.
UFU Dairy Policy Officer Chris Osborne told Farming Life that the upturn in prices recorded at this week’s auction was a direct consequence of European buyers returning to the market.
“Thursday’s auction result reflects a welcome improvement in milk producer returns,” he added.
“But we are starting from a very low base.”
The UFU expects international milk markets to strengthen gradually over the coming months.
Responding to the result of the June auction results Ulster Unionist MEP, Jim Nicholson, said: “Given the drop in prices over recent months the increase in this week’s United Dairy Farmers auction to 22.98ppl will be welcomed by many as a sign of some stability returning to the markets. It is important for the entire supply chain that dairy farmers receive a fair price, the high costs of production do mean that producers need this upward trend to continue especially after the extreme volatility and falling profit margins they have recently experienced.
“On a European level I have been working to ensure that the Commission monitors the dairy sector closely while last week in Strasbourg MEPs debated the situation faced by EU dairy farmers. Although global trends are a factor - indeed this UDF result follows some recent gains at the Fonterra auction - there is also a need for increased cooperation if the sector is to realise its full potential. Finally the global nature of the markets and the abolition of quotas mean that the market measures must be fit for purpose and this is an important aspect of the on-going CAP reform process.”
William Taylor, FFA Northern Ireland co-ordinator made the following statement in the wake of Thursday’s auction.
“London bus drivers are in strike mode over bonus money for their part in the forthcoming London Olympics. Meanwhile local dairy farmers need an approximate 80% increase just to reach the European Milk Board cost of production figure of 40p/l.
“It is unrealistic of United Dairy Farmers’ management to assume that members of United Dairy Farmers are going to continue to support them, while returns continually bump along the bottom of the milk price league.”
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Monday 20 May 2013
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