A stronger global protein market and better-balanced commodity prices are pushing up Arla’s on-account price for both conventional and organic milk from October.

Arla’s farmer owners can look forward to a bigger milk cheque next month. The co-operative is raising its on-account price by 2.0 euro cents per kilo for both conventional and organic milk from October, Arla states in an announcement. The figure includes a minor currency adjustment.

The prices apply to milk of the highest quality and include the FarmAhead™ Check, the FarmAhead™ Incentive, maintenance costs and logistics support. Non-GM feed remains a requirement for conventional milk.

Protein demand drives the increase
According to Arla, the rise is partly due to commodity prices having come into better overall balance, helped along by a strong protein market. Skimmed milk powder in particular has become more sought after globally on the back of firm demand and tight supply, partly as a result of lower production in the US. Whole milk powder, meanwhile, is holding steady.

The picture on the cheese market is more mixed. Gouda prices have risen sharply due to strong demand and limited supply, whilst European mozzarella has eased slightly but remains high compared with other cheeses. The US market is considerably weaker. Butter, by contrast, is moving in the opposite direction: there is an oversupply of milk fat and large stocks, and buyers are well covered and largely trading tactically.

Global milk volumes rising
These developments come against the backdrop of a global milk supply that is broadly stabilising at a high level. In July, milk production in the EU and the UK grew by 2.0 per cent despite hot, dry summer weather. The US recorded an increase of 2.2 per cent, whilst New Zealand posted a marked rise in milk solids of 7.9 per cent, supported by favourable weather and good operating margins.

By Maja Løvstrup
Photo: Arla Foods