When the MPI was launched in May 2013, the UFU stressed it should be viewed as an indicative price of what dairy markets were capable of returning at a given point in time. Before this the UDF Milk Auction provided a barometer as to what price farmers should receive for their milk. But since it was abolished, NI dairy farmers had no indication as to the value of the milk they were producing and the MPI filled this gap.
It is with reluctance that the UFU have suspended the MPI, but stressed that this is only temporary and the decision has been taken due to the current exceptional circumstances with world dairy markets arising in particular from the Russian ban on food imports from many of the world’s major food trading nations. This suspension will be kept under review until the stabilising effect of Private Storage Aid (PSA) for Butter, Skimmed Milk Powder and Cheese becomes clear.
Dairy prices have been and are currently experiencing downward pressure brought about by an unprecedented combination of bearish factors in the market, most notably the Russian embargo of EU dairy products.
However, Dairy Commodity markets are showing signs that the heat maybe coming out of price falls. Dutch Dairy Board (DDB) Whole Milk Powder prices have fallen by c.20% over the last 4 weeks, yet the rate of fall has slowed considerably, with a drop of 2.03% this week. Bullish market sentiments are expected to be generated soon with the return of influential buyers in China and North Africa returning to the market.
DDB butter prices have fallen by 13.45% in the last month, but the decline has also slowed in the last week. Skimmed Milk Powder has fallen 21.68% over the same period, yet prices have remained unchanged this week at the latest DDB auction. With confirmation that PSA for Skimmed Milk Powder and Butter has been formally adopted and with cheese due be ratified at the time of publication, the hope is that this will create a much needed halt to falling prices.