Dairygold and Other Irish Processors Cut October Milk Prices Amid Global Supply Surplus

Dairygold Co-operative has announced a reduction in its October milk price by 3.25 cents per liter, bringing the rate down to 38 cents per liter for milk with 3.3% protein and 3.6% butterfat, inclusive of bonuses. This decision aligns with similar actions by other major Irish dairy processors, such as Kerry Dairy Ireland and Lakeland Dairies, who have also reduced their prices by over 3 cents per liter and 4 cents per liter, respectively.

The price cuts are attributed to a persistent global oversupply of milk, which is affecting returns on key dairy products like butter, cheese, and milk powder. Dairygold's chairperson, Pat Clancy, noted that market sentiment is weak due to the strong global supply outpacing demand.

The average farmgate milk price for Dairygold suppliers in October is now equivalent to 51.1 cents per liter based on average milk solids. Additionally, when converted to the EU standard constituents of 3.4% protein and 4.2% butterfat, the quoted October price is 41.6 cents per liter inclusive of VAT.

This trend of price reductions highlights the intense pressure on processor margins and underscores the challenges faced by the dairy industry in adjusting to the current market dynamics. The situation calls for a significant change in the supply-demand balance to improve the market outlook.

Futures markets suggest that commodity prices may remain subdued, reinforcing the need for strategic adjustments to navigate the ongoing market challenges in the dairy sector.