Slight decrease in Ornua PPI for July
Ornua's estimate of member co-ops' processing costs was 9.3c/L in the month (9.6c/L in the previous month).
Ornua has said that it should be noted that these estimated processing costs:
Based on Ornua's estimate of the average cost of processing the Ornua basket of products, which is not representative of any individual member co-op processor;
Exclude any allowance for member co-op processor margin;
Are based on an updated methodology (from March 1, 2024) which uses Ornua's initial estimate of member co-op processing costs from 2020 as a base and indexes the variable elements to external indices which will be updated quarterly in arrears;
Will rise and fall quarterly in line with the movements in the variable costs (most notably energy) as per the external indices.
After deducting estimated processing costs, Ornua's PPI implies an indicative return of 45.5c/L, 5.1% VAT inclusive (unchanged from the previous month of 45.5c/L) for milk of 3.6% fat and 3.3% protein which is net of Ornua costs to market.
The results reflect somewhat weaker market returns for the month of July, offset by lower estimated processing costs.
In addition to the above, the 'Ornua Value Payment' payable to member co-ops in the month is €8.2 million, which equated to 3.8% of gross purchases in the month.
The PPI relates to product settlements/payments for the month and for reasons of seasonality is not directly aligned with milk production and payment.
Recently, Ornua announced that global milk collections increased by 1.7% in May, driven by growth in the US and Europe.
The latest Ornua Global Dairy Market Report outlined that while the global milk supply outlook has improved, flows are "unlikely to be a major burden".
Milk flows across the EU grew by 1.2% in April and a further 0.3% in May due to increases in France, Poland, and Ireland.
In Ireland, flows rose sharply in March and April, and by a further 6.8% in May, albeit from a low base.
The annual forecast for the 27 EU member stated has been revised up. However, the report states that growth expectations are modest and may be impacted by factors such as weather or animal health issues.
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