High milk production hits global dairy prices

Strong milk production is putting downward pressure on global dairy commodity prices.

The spring flush in the northern hemisphere has shown no sign of dampening, while New Zealand production has still been strong going into its trough.

UK dairy farms produced 1.246bn litres in March, 12% more than last year, taking the total for the milk year before butterfat adjustments is 13.670bn litres, the best for nine years.

See also: Milk production year is best in almost 10 years

The average winning price at Fonterra’s Global Dairy Trade auction fell 8.9% last week, dropping for the fourth event running.

Butter prices tumbled 11% to sell at an average of £2,428/t, buttermilk powder was down 15% at an average price of £2,531/t, and anhydrous milk fat sold for £2,442/t on average, down 11.3%.

But DairyCo has reported a recovery in the UK butter and cream markets, which have suffered since the end of February.

The average price for butter in March was 1% up on the month at £2,900/t, while the cream price rose 4% to an average of £1,380/t.

“As Easter approaches, some buyers have ventured back into the butter and cream markets,” DairyCo’s report said.

“Both markets saw buyers looking to cover short term demand and relatively low spot availability allowed prices to pick up through the month.”