03 Oct 2012
MARKET TRENDS CONTINUE TO JUSTIFY MILK PRICE INCREASES – KIERSEYDairy
IFA National Dairy Committee Chairman Kevin Kiersey today (Wed) said that while this week’s Fonterra auction showed a traded weighted price down 0.9%, whole milk powder – the main product traded through the auction – had seen a 2.8% price uplift.
Mr Kiersey added that European commodity prices were continuing to firm up, and said further producer milk price increases remained fully justified for September milk. He added co-ops which had not increased August milk prices should now make decide on a September milk price lift which will make up the gap which has developed.
“European commodity quotes have continued firm to up in the last few weeks, and gross returns based on last week’s quotes for SMP and butter are 11c/l above where they were last May. Gross (pre-processing costs) returns are around 39c/l on the main Dutch, German and French markets,” Mr Kiersey said.
“The extreme cost/price squeeze compounded by the appalling summer weather which dairy farmers have faced this year means that they need more than anything the most rapid possible increase in milk price to return anywhere near profitability,” he added.
“Some co-ops failed to increase milk prices in August, further disadvantaging their suppliers. It is essential that those co-ops, including Kerry who have committed to paying a ‘leading milk price’, would lift their September milk price sufficiently to make up the gap which has developed,” he concluded.