MARCH PRICE LIFT JUSTIFIED AS IDB HOLD FEBRUARY INDEX

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MARCH PRICE LIFT JUSTIFIED AS IDB HOLD FEBRUARY INDEX
05 Apr 2011

MARCH PRICE LIFT JUSTIFIED AS IDB HOLD FEBRUARY INDEX

Dairy

IFA National Dairy Committee Chairman Kevin Kiersey said that the Irish Dairy Board had held the prices of butter and SMP traded by co-ops during March at the February level, which yielded a gross 37.86c/l before processing cost, at 3.3% protein and 3.6% butterfat.  He added that today’s Fonterra Global Dairy Trade auction had seen a modest 2.4% price adjustment overall, and a small 1.5% price increase for SMP.

Mr Kiersey stressed that IFA had argued in February that a 3c/l price increase to 33c/l + VAT was fully justified, and this argument remained valid for March, as no co-op had increased their price much above 31.5c/l + VAT. He added that, as Cheddar cheese prices are now rising, a 1.5c/l price increase in March is both credible and affordable for all co-ops, and important to allow farmers cope with rising input costs and make necessary on farm investments.

“While top spot quotes have weakened somewhat in recent weeks, it is clear that, in the main, butter and powders have continued to trade at reasonably strong prices during March. In addition, Cheddar Cheese prices, which normally lag behind other commodity price trends by a few months, have started to lift in the last few weeks,” Mr Kiersey said.

Commenting on global markets, he added that the small 2.4% adjustment in the Fonterra weighted average auction price, and the 1.5% increase in average SMP prices, reflected the fact that buyers still see the world market is in relatively tight balance despite recent weakness in spot quotes.

“It is clear to me that co-ops have scope to increase milk prices in March. To allow their suppliers’ margins to recover in the face of rising input costs, and to enable them to plan necessary on-farm investments, they must pass back 1.5c/l on March milk,” he concluded.

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