Dairy Markets February 20, 2015 12:00 am Global Markets There is some optimism that global milk commodity values may have turned a corner. The latest GDT (Fonterra) auction on the 17th February showed a 10% increase in the weighed average price compared to values a fortnight earlier. The average price was €3,366 per tonne. This is a 34% increase on the low-point the market reached in December. UK Prices Despite recovering commodity values, UK farmgate prices are still falling as they catch-up with earlier reductions. Significant movements announced so far this month (to apply from the 1st March unless stated) include; 1.5ppl reduction for Dairy Crest suppliers. This results in a Davidstow price of 25.09ppl form a standard litre and 2309ppl for liquid suppliers The Dairy Crest formula price will fall by 0.384ppl resulting in a price of 28.64pp Muller Wiseman is reducing its price from the 5th March by 1.75ppl to a standard 24.15ppl Meadow Foods suppliers will see a cut of 1.4ppl to a price of 22ppl First Milk After the excitement of last month, First Milk has announced that it will be holding its prices for March. However, the co-op is to introduce a new ‘A’ and ‘B’ pricing mechanism from 1st April. The ‘A’ volume will be 80% of a producer’s average output for the same month over the past two years. There will be a pre-announced price for the ‘A’ milk – with 30-days notice. Any ‘B’ milk will be paid a fluctuating price depending on market returns. There will be other adjustments to the co-ops contracts for butterfat, protein and hygiene. The ‘liquid’ pool will also be renamed the ‘balancing pool’ to reflect the fact that the end use of this milk is no longer largely liquid markets. The ‘A’ and ‘B’ pricing system is also been adopted by other buyers suchas Meadow Foods and Graham’s Dairy. it is in response to the current ‘glut’ of milk, and the imminent end of the quota system.
