Milk procurement prices across Europe continued to strengthen into July, supported by firmer butter and milk-powder markets and higher values for key milk components. However, the latest comparison showed significant differences in payments between processors and countries, while milk prices in the United States moved in the opposite direction.
The comparison used the standard ZuivelNL benchmark, based on milk containing 4.2% butterfat and 3.4% protein. All prices were reported before VAT, allowing payments from different processors to be compared on a common basis.
Among major European processors, Arla Foods recorded an increase in its milk payment as the values assigned to butterfat and protein strengthened. German dairy cooperative DMK also raised its payment during the month. Saputo Dairy UK reported an increase of around 5% across milk components, while currency movements provided additional support to its effective milk price.
The European trend contrasted with developments in the United States. US farmgate milk values declined during the comparison period, with lower domestic returns for milk fat and protein contributing to the weaker result. The difference highlighted the importance of regional dairy markets and the varying influence of commodity prices on producer payments.
Irish Cooperatives Show Different Payment Levels
Irish dairy cooperatives recorded further increases, although the final position varied depending on sustainability incentives and other payments.
Tirlán was the only Irish cooperative in the comparison to exceed the European average after incentive payments were included. Its base milk price stood at €36.97 per 100kg. A Sustainability Action Payment of €0.50 per 100kg increased its reported effective payout to €40.36 per 100kg. This placed Tirlán approximately 10 cents per 100kg above the continental average.
Dairygold also recorded its third consecutive monthly increase. Its base price reached €37.78 per 100kg, while sustainability premiums increased the effective payment to €39.43 per 100kg. Although this represented continued improvement, the final figure remained below Tirlán’s payment after incentives were included.
| Cooperative | Base Price | Effective Price |
|---|---|---|
| Tirlán | €36.97/100kg | €40.36/100kg |
| Dairygold | €37.78/100kg | €39.43/100kg |
Milk Supply Growth Loses Momentum
European milk deliveries continued to rise seasonally, but the pace of growth slowed compared with April. Collection volumes remained relatively high compared with longer-term averages, although individual countries experienced different supply trends.
Belgium, Germany and the Netherlands reported higher milk intake. Poland, however, recorded its first year-on-year decline in milk supply in several years. Ireland also experienced slower growth in milk deliveries from late spring.
Weather conditions added another factor to the European milk supply outlook. Summer heatwaves and soil-moisture deficits affected parts of western Europe, temporarily reducing milk availability in some areas. Weather-related production pressures can influence both the volume of milk reaching processors and the availability of dairy ingredients for the market.
Commodity Markets Support Producer Payments
The stronger procurement prices reflected a combination of market and supply factors. Butter and milk-powder markets improved, increasing the value of milk components used by processors when determining producer payments.
At the same time, slower growth in milk collections limited the pace at which additional supply entered the market. The interaction between component values, commodity prices, weather conditions and milk production resulted in different payment outcomes across European processors.
The July comparison therefore pointed to a European dairy market where producer prices were generally strengthening, but where payments continued to vary significantly between processors. Meanwhile, declining US farmgate values demonstrated the contrasting conditions facing dairy producers in different markets.
