Glanbia Ireland (GI) will pay a base milk price for April of 28c/L (inc VAT) for creamery milk at 3.6% fat and 3.3% protein. This is a reduction of 1c/L from the March base price. Last month it announced a 2c/L cut for March supplies.
Today, it announced that farmer members will also receive a 0.42c/L (inc VAT) payment from Glanbia Co-op on all milk supplied this month as their ‘Share of GI Profit’.
Glanbia Chairman Martin Keane said dairy markets continue to be impacted by Covid-19 and the current returns from its basket of products unfortunately require an adjustment in milk price.
“The pace of recovery in consumer activity, as well as global milk supply trends, will be key factors driving dairy market movements in the months ahead.”
Coronavirus impact
It also said that all Glanbia Ireland milk processing facilities continue to operate to their planned capacity levels for this time of year.
Most processors cut milk prices by 2c/L for March deliveries on the back of a sharp slide in commodity values when food sector demand across Europe, Asia and North America collapsed as a result of the Covid-19 lockdowns.
And while European dairy markets have settled over the past fortnight, and demand from China has improved, industry sources claimed that farm-gate milk prices were still 2-3c/L above what the returns from the markets could currently justify.
Processors also pointed to the high levels of product they were being forced to hold because of the fall-off in demand.
Richard Scheper of Rabobank said there was “more positive sentiment” around the dairy sector at the moment, with the lifting of some lockdown restrictions in Europe and improved demand from China helping to steady markets.
However, although Rabobank in their latest global review expect Chinese dairy demand to normalise in the second half of the year, import requirements are forecast to decline 19pc on 2019.
Butter prices on the Dutch spot market improved by €40/t to €2,610/t last week, while SMP and WMP were steady at €1,900/t and €2,550/t respectively.
But Mr Scheper warned of further difficulties for the dairy sector should the lockdown restrictions remain in place into the second half of the year. He said increased stockpiles of EU dairy commodities were a further cause for concern.
“Even if most of the lockdown restrictions will be removed in the months going forward we will probably still have some year-on-year losses in the food-service sector for most of the rest of the year. Furthermore, we do expect to see losses in export volumes in quarter one and quarter three, while the EU is close to its seasonal peak in milk production,” Mr Schepers said.
He predicted that farm-gate milk prices were likely to fall across the EU in the second and third quarters due to the continued uncertainty in markets.
