United Dairy Farmers auction price shock

DAIRY farmers supplying Northern Ireland co-op United Dairy Farmers were shocked by last Thursday’s monthly auction which delivered an average 3ppl down on the month.

While outside observers too were concerned by the 26.66ppl sale realisation for 51 million litres, United Group chief executive David Dobbin was not surprised.

“With commodity markets down over recent weeks, and the spring flush in milk production underway, it was not surprising that the average price was down on last month, while managing to stay 1 pence ahead of the price at this time last year.

“This was the first of our peak supply milk auctions for 2011 and the seasonal rise in local milk supplies had a direct impact on prices, which averaged 26.66 pence per litre,” he said.

“This was 3.2 pence, or 12 per cent, down on last month’s average; but was still the highest March auction price since deregulation in 1995 and the average was one penny per litre ahead of the March auction last year.

International markets

“The auction was also influenced by the recent weakening in international dairy markets with prices, particularly for milk powder and butter, moving lower on the back of rising EU and US milk supplies and weaker demand.

“The tsunami in Japan, on-going unrest in North Africa and the Middle East, and signs of an economic slowdown in China, have led to a general downturn in commodity markets.”

Mr Dobbin also pointed to the most recent Fonterra auction prices for wholemilk powder which fell by 11.4 per cent and prices for SMP in the EU which have fallen by more than 10 per cent in the past week.

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