Processor maintains January payment as stronger commodity prices are offset by concerns over global supply and Middle East demand.
Kerry Dairy Ireland has announced that farmers will receive 37.5 cent per litre (c/L) for milk supplied in February, maintaining the price paid for January milk. The payment includes VAT, quality bonuses and sustainability bonuses.
The announcement provides stability for suppliers as the dairy sector continues to navigate changing commodity prices and global market conditions. However, the processor has indicated that geopolitical developments could create additional uncertainty for dairy sales.
February Milk Price at a Glance
|
Payment basis |
Milk price |
|---|---|
|
February milk price |
37.5 c/L |
|
Change from January |
No change |
|
Standard EU constituents |
41.08 c/L |
|
Average February milk solids |
43.3 c/L |
|
VAT and bonuses |
Included |
The 37.5 c/L payment is based on the processor’s standard milk pricing arrangements. When calculated using EU standard constituents of 3.4% protein and 4.2% butterfat, the price equates to 41.08 c/L including VAT.
Based on the average milk solids supplied to Kerry Dairy Ireland in February, the equivalent payment is 43.3 c/L including VAT and bonuses. This figure reflects the higher milk solids composition of the average supply compared with the standard EU calculation.
Commodity Prices Strengthen Despite Global Supply Growth
In its February milk statement, Kerry Dairy Ireland said commodity prices have strengthened in recent weeks despite continued growth in global milk supply.
The development suggests that stronger market returns are providing some support to dairy prices, even as milk production remains on an upward trend. For processors and farmers, the balance between supply growth and demand will remain important in determining future milk price movements.
The statement indicates that recent commodity market improvements have helped support the decision to maintain the February milk price. However, the outlook remains dependent on how global dairy markets evolve in the coming months.
Middle East Conflict Creates Demand Uncertainty
Kerry Dairy Ireland also highlighted the potential impact of the ongoing conflict in the Middle East on dairy sales.
The processor said the conflict could hamper milk sales, with the possibility of countries in the region reducing their purchases. A reduction in demand from the region could affect dairy product sales and place pressure on market returns.
The warning underlines the importance of international trade to the dairy sector. Changes in purchasing activity in major importing regions can influence demand for dairy products and, in turn, the prices processors are able to pay farmers.
Stable Payment Offers Short-Term Support
By maintaining the January price, Kerry Dairy Ireland has provided suppliers with a stable payment for February milk. The decision comes at a time when farmers and processors are monitoring both commodity prices and global market developments.
The difference between the standard payment and the average milk solids equivalent also highlights the importance of milk composition in dairy pricing. Farmers supplying milk with higher protein and butterfat levels may receive a higher effective payment under the processor’s pricing system.
For suppliers, the February announcement offers short-term certainty, while the market outlook remains closely linked to global milk supply, commodity prices and demand conditions.
Outlook for the Dairy Sector
Kerry Dairy Ireland’s latest statement presents a mixed picture of the dairy market. Commodity prices have strengthened, but continued growth in global milk supply and geopolitical uncertainty remain potential challenges.
The February milk price decision reflects a cautious approach, maintaining the previous month’s payment while the processor assesses market conditions. Future price movements will depend on the sustainability of commodity price improvements and the strength of demand in key international markets.
For Irish dairy farmers, the announcement reinforces the importance of monitoring milk price trends, milk solids performance and global dairy market developments as the year progresses.