Milk prices paid to NI farmers have been on an upward trajectory since November, rising from an average base of 30.3p/l to 34.3p/l in February, excluding winter bonus payments.

Higher milk prices have been due to improved returns for dairy commodities, particularly within European markets.

Butter prices at the weekly Dutch Dairy Board (DDB) auction increased from €4,320/t in September 2023 to a 17-month high of €5,950/t by early March.

During that same period, whole milk powder (WMP) rose from €3,150/t to €3,600/t while skim milk powder (SMP) increased from €2,120/t to €2,460/t.

Positive price trends for the same commodities have also been recorded at the bi-monthly GDT auction, with 10 out of the last 14 events recording higher returns.

However, during March, commodity markets in Europe have come under pressure.

Butter price is down €340/t since the start of the month, dropping to €5,610/t by 20 March. WMP and SMP have seen smaller reductions, down €250 and €120/t, respectively.

Those lower commodity prices are reflected in the Ulster Farmers’ Union milk price indicator (MPI), which has eased to 33.71p/l, down from 35.18p/l on 8 March and 35.43p/l in late February.

Local processors indicate the latest market slowdown is likely to impact milk prices this spring, just as NI dairy farms reach peak production.

Base prices are currently running ahead of the MPI.

Unless commodity prices stabilise over the coming weeks, processors maintain it will be a challenge to hold base prices at current levels. Any immediate prospect of further price increases are rapidly dwindling.

In Britain, the trade is less exposed to global commodity markets and milk prices continue to creep upwards. Muller will increase its base by 1p/l to 37.5p/l from 1 April with First Milk adding 0.75p/l, bringing its base to 38.75p/l for manufacturing milk.

Arla has yet to declare for April, but is paying a March base of 40.06p/l for manufacturing milk.

While these prices are significantly ahead of those paid by NI processors, they relate to milk at 4.2% butterfat and 3.4% protein. Adjusting NI milk to the same base constituents would add approximately 2p/l to starting prices paid by NI processors.

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