The Ulster Farmers’ Union MPI has not been published for the last four months due to matters beyond our control, but it will be issued on a fortnightly basis from next week. In the meantime, we will look at how the index has performed since it was last published on 20 January 2023.
MPI saw a large drop on 10 February, when it dropped by 9.75%. Since then, over the next three months, it slipped by 4% which is less than expected and since 7 April to today, it has weakened by 0.23%. So, in total, commodity prices have fallen by 15% even when factoring in the large drop in early February.
Closer analysis of the data shows that the correction was driven by falls in butter, cheese (specifically mild cheddar and mozzarella) and whey prices. Powder prices did not fall by the same levels, with skimmed milk powder back 12% since the new year, and it has seen gains in recent weeks. An almost identical fall for whole milk powder (WMP), back 11.70% since 6 January.
Currently prices are holding, and we could go as far as to say there is growing optimism. This is illustrated by the fact that up until two weeks ago, the GDT auction index in New Zealand had risen for two consecutive events (up 3.2% and 2.5% respectively). When it did fall at the last auction on 19 May, it was only down by 0.9%. This optimism has been further backed by Dutch Dairy Board (ZuivelNL) data which recorded increases for butter and WMP for the last four consecutive weeks.
Butter prices are now back up to levels last seen in January 2023 and New Zealand butter futures prices up five weeks in a row. There are also positive signs on the cheese side with mozzarella up €300/tonne to €3450 and positive signs for gouda and curd. But this is tempered by sluggish whey prices which going forward will feel the impact of an overhang in the United States.
In summary, there has not been a universal crash in dairy commodity prices in the last three months which some had predicted. In terms of the outlook for prices, negativity has been replaced with cautious optimism.
The latest MPI on 19 May was 33.91ppl.
