From August, Arla’s price for conventional milk will rise by 1.0 euro cents per kilo, whilst the organic price remains unchanged. According to the dairy group, the increase reflects a stable global milk supply and rising protein prices.
Arla’s farmers can look forward to a higher milk price in August. The price for conventional milk will rise by 1.0 euro cents per kilo, whilst the price for organic milk will remain unchanged, the company said.
The increase brings Arla’s top-quality conventional milk price, which is based on Non-GM feed and includes the FarmAhead™ Check, the FarmAhead™ Incentive, and allowances for maintenance costs and logistics, to a higher level. The top-quality organic milk price, calculated on the same basis excluding the Non-GM element, will also increase slightly. FarmAhead™ points had a modest positive effect on the overall milk price.
According to Arla, the price rise was driven mainly by developments in the global milk supply, which the company said had stabilised at a high level. Raw material prices were said to be broadly stable overall, with the exception of protein, where prices were rising.
The outlook for organic milk was described as more uncertain. Arla pointed to weaker retail prices and/or falling sales volumes weighing on profitability across several markets, adding that the outlook going forward remained unclear.
Heat leaves its mark on milk production
Growth in milk production across the EU and the UK is slowing. Production rose by 2.9 per cent in April compared with the same month last year, down from growth of 4.3 per cent in March, according to Arla.
Part of the explanation lies in the bluetongue outbreak, where delayed calvings had previously pushed production higher; that effect is now fading. At the same time, the recent heatwave has left its mark: in several European countries, heat stress was said by Arla to have led to falling milk production over the past fortnight.
In the US, the trend has moved in the opposite direction. Milk production there rose by 2.3 per cent in May, driven by continued herd expansion among American farmers.
Cheese market steadies
Following a weaker June marked by falling prices and negative sentiment, the mood in the cheese market has now turned more positive. According to Arla, this was partly due to a larger milk supply following the easing of the heatwave in Europe.
Mozzarella was described as the most stable segment at present, supported by solid seasonal demand and a slightly firmer price trend, whilst prices for gouda and edam remained flatter.
Sharp price swings in milk powder
The EU milk powder market has seen marked volatility over the past two weeks. Following a prolonged downward trend, prices rose sharply as the European heatwave peaked. A combination of reduced milk collections and rising prices for liquid milk was said by Arla to have given strong support to both spot and futures markets for milk powder.
Butter markets, by contrast, have shown renewed stability following several months of falling prices.
By Maja Løvstrup
Photo: Arla Foods
