There is little doubt that the global dairy commodity markets are moving in a positive direction.

But with the prices of butter and skimmed milk powder on the world market at £1,190/t and £1,293/t, respectively, these markets have a considerable way to rise before they even reach the EU intervention prices of £1,982/t for butter and £1,531/t for SMP. Using these intervention prices, the Intervention Milk Price Equivalent for April is calculated as 19.6p/litre.

It is evident that even with the rises seen on the global markets, it will take EU traders some time, with the help of export subsidies, to clear the considerable volumes of stock now sitting in EU stores.

On a more positive note, the GB market is still helped by a relative degree of isolation. Big cheese buyers are still paying about £2500/t for domestically produced mild Cheddar from factories with a good track record for quality and consistency. This is despite parcels of cheaper imported Cheddar being available for about £2,000/t.

This £2500/t for mild Cheddar converts into a Milk for Cheese Value Equivalent of 24.65p/litre, which gives a 5p/litre premium over turning this milk into butter and SMP for intervention, a factor that is undoubtedly supporting our domestic farmgate price at present.

The returns that can be achieved by processors with existing contracts to produce quality cheese are also helping to prop-up prices in the liquid milk market. Although there is severe competition in the liquid milk middle ground, in recent weeks we have seen companies such as Robert Wiseman Dairies give a guarantee that they will not implement any further price cuts before 31 July. This has to be a positive signal to farmers, with Wiseman’s customers willing to pay a price that will sustain domestic dairy farming through this period of depressed commodity prices.

Dairy commodity prices

 

April 2009

March 2009

April 2008

AMPE (p/litre)

19.1

19.6

24.9

MCVE (p/litre)

24.65

24.63

28.67

SMP (£/t)

1,500

1,550

2,000

Butter (£/t)

1,950

1,950

2,150

Mild Cheddar (£/t)

2,500

2,500

2,850

Cream (£/t)

820

780

940

 

April 2009

March 2009

April 2008

Dairy farmer numbers (England and Wales)

11,787

11,827

12,365

Deliveries to Dairies (m litres)

1,143

1,122

1,139

 

February 2009

January 2009

February 2008

DEFRA farmgate milk price (p/litre)

24.52

25.57

25.62

Source: DairyCo

DairyCo Datum league table (March)

 

Monthly price

Annual average

Dairy Crest M&S – level supply 2

28.64

28.58

DC M&S – variable
supply 2

28.64

28.50

Dairy Farmers of Britain Liquid TESCO 2

28.44

28.44

Dairy Crest Waitrose 2

28.32

28.29

Wiseman Tesco 3

28.19

28.11

Arla Tesco 3

27.55

27.98

First Milk Tesco – profile payment 3

27.79

27.77

First Milk Tesco – dual pricing 3

27.46

27.58

Milk Link Cumbrian Direct Group

27.24

27.24

Wiseman Sainsbury

26.96

26.88

Barber A.J & R.G

26.55

26.52

DC Sainsbury – level supply

26.46

26.40

DC Sainsbury – seasonal supply

26.46

26.31

Milk Link Tuxford & Tebbutt

26.34

26.25

DC cheese Davidstow – level supply

26.30

26.24

DC cheese Davidstow – seasonal supply

26.30

26.16

Lactalis/Caledonian Cheese  profile payment

25.99

26.09

Arla Asda

25.30

25.72

Lactalis/Caledonian Cheese – seasonal supply

25.49

25.69

Grahams Dairies

25.54

25.54

Lactalis/Caledonian Cheese

25.49

25.49

Claymore Dairies

23.61

25.29

Wyke Farms

25.14

25.14

Arla non-aligned

24.60

25.02

Parkham Farms

24.11

24.90

Wiseman Partnership

24.96

24.88

First Milk Highlands & Islands Area – profile payment

24.88

24.87

Wensleydale

24.84

24.84

First Milk H&I Area – dual pricing

24.62

24.83

Meadow Foods level supply

24.80

24.81

Meadow Foods

24.80

24.75

Milk Link London liquid

24.76

24.75

Arla AFMP

24.30

24.72

DC Liquid – level supply

24.76

24.70

Belton Cheese

24.69

24.69

Paynes Dairies

24.65

24.65

DC Liquid – seasonal supply

24.76

24.61

Milk Link northern expansion – seasonal supply

24.54

24.55

Milk Link manufacturing – seasonal supply

24.54

24.40

Milk Link manufacturing – A&B pricing

24.21

24.31

Milk Link northern expansion – A&B pricing

24.21

24.31

Glanbia Llangefni

24.09

24.00

Joseph Heler

24.00

24.00

South Caernarfon Creameries

23.85

23.87

First Milk liquid – profile payment

23.85

23.83

First Milk liquid – dual pricing

23.60

23.81

First Milk compositional – profile

23.58

23.57

First Milk compositional – dual Pricing

23.34

23.55

DFB liquid London premium

22.95

22.91

DFB liquid Midland premium

22.60

22.56

DFB liquid

22.20

22.16

DFB compositional

22.10

22.06

Saputo/Dansco – level supply

21.64

21.64

Saputo/Dansco – seasonal supply

21.34

21.27

2 The milk prices listed above will vary according to the amount of milk that is required by each retailer. Additional milk will be paid for at the conventional liquid milk price of Dairy Farmers of Britain (DFB) and Dairy Crest (DC), respectively. The milk price above assumes that all litres produced are sold into the dedicated milk pools.

3 Farmers signed up with the Promar costings survey get an additional 0.50p/litre

• Milk prices are ranked according to the annual average price that would be paid on a contract for 12 months going forward if the present price schedule remained the same. Prices listed above are exclusive of: Capital Retentions, Administration Charges, Farmer Group Subscriptions, and VAT, but are inclusive of: DairyCo Levy, Seasonality.

• For more information visit www.dairycodatum.org.uk