This Week’s Fonterra Auction Latest Indicator

IFA National Dairy Committee Chairman Kevin Kiersey said the second Fonterra auction for January, dealing with products for trade up to July 2013, was the latest of a number of positive indicators for dairy markets in the first half of 2013.

Mr Kiersey said: “I welcome the decision by Connacht Gold to increase their December milk price by 1c/l, which is an important first step in improving their relative position. The fact is that milk price increases are fully justified by improving markets, and I call on all co-ops to rapidly reflect the strong rising returns in advance of the Irish production season”.

“In recent weeks, we have seen EU butter, whey and whole milk powder prices firm up at already high levels. We have seen this reflected in the IDB December index, which increased by 2 points to 111.1 as a result of butter and cheddar price improvements. The two Fonterra auctions this month showed increases in the trading price of many commodities, especially butteroil (AMF), casein, whole and skimmed milk powder, while protein concentrates and cheese prices have remained quite firm,” Mr Kiersey said.

“In their December quarterly dairy report, Rabobank have also flagged firm markets for the first half of the year, because of continued constrained supplies in the Northern Hemisphere, a slower end of season in New Zealand, and falling inventories forcing buyers back out,” he added.

“It is essential that co-ops would lift milk prices before the Irish season starts, in order to maximise supplies by making sure farmers can start production with optimum prices and margins, at a time when costs remain quite high,” he said.

“I urge all co-ops to increase milk prices from December supplies, to give Irish farmers a fair crack at maximising their incomes in what it appears will be a good dairy year following from a very difficult one,” he concluded.

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