Average farmgate milk prices declined in December for the first time in seven months, according to latest figures from DEFRA. At 34.26p/litre, prices were 0.25p down on the previous month, but were still 4.12p higher than in December 2012.

“As is typical at this time of year, with milk production moving towards the peak production period, wholesale prices have started to move downwards,” said a report by DairyCo.

“However, the continued recruitment drive by some of the larger milk buyers (notably Arla and Muller Wiseman Dairies) could inhibit any downward farmgate price changes as other buyers may feel pressure to remain competitive,” it added.

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“The clause within the voluntary code providing for a three-month notice period is also likely to reduce the likelihood of any price movements.”

However, in the longer term, the northern hemisphere peak in production would put downward pressure on markets, said the report. “The spring review of the cost of production models will also add its influence to milk pricing on domestic markets, with feed and fuel price trends suggesting a downward adjustment.”