UFU Remains Optimistic About Milk Prices

UK - The Ulster Farmers’ Union is cautiously optimistic about Northern Ireland milk prices despite Fonterra, the world’s largest dairy exporter, announcing a 1.6 per cent fall in the price of Whole Milk Powder (WMP) sold through its internet auction platform.
calendar icon 5 February 2010
clock icon 2 minute read

UFU Deputy President John Thompson said: “The Fonterra result is more positive than it appears and this slight downward movement reflects the fact that the Dollar has strengthened in recent weeks. Consequently, the price in Euro terms is actually marginally up by €25 per tonne from last month. The February auction recorded an average price of US$3,256 per tone which was slightly down from January’s average price of $3,309.”

“The Fonterra auction is a useful and accurate barometer for the United Dairy Farmers Auction and whilst the UFU is disappointed that the auction has dropped slightly, it still compares favourably to the 7.6% drop recorded in January 2010.

"This month’s result reinforces the belief that the market is stabilising and this is reinforced by the fact that late season production in Australasia was affected by their adverse weather and the continued demand continues to be strong and relatively on world markets.”

The UFU believes that this stabilization should be reflected in the next United Dairy Farmers auction due to be held on 25 February.

Under normal circumstances, this optimism may be countered by the impact of the resurgent value of sterling in recent weeks, but the UFU believes that the impact of continued fall in milk production will be reflected in the next auction.

Northern Ireland production was down in 2009 by 130.75 million litres to 1.72 billion litres, meaning there is less milk in the system. The cold weather at the start of the year is expected to have a downward effect upon milk volumes in Northern Ireland, with some analysts expecting a month-on-month reduction of as much as nine per cent.

John Thompson added; “In light of the market observations mentioned above, if you compare the direction of prices in New Zealand with the United Dairy Farmers auction, over the last 18 months, there is a clear correlation between the two.

"Anything less than a further stabilisation of local milk prices will not be acceptable as that would mean NI dairy farmers once again getting a price for their milk which bears no reflection upon the costs of production.”

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