Average farmgate milk prices improved to 26.66p/litre in August – 0.3p/litre up on the month but still 0.93p/litre below the same time last year.

At that level, values were slightly above DairyCo’s Actual Milk Price Equivalent for the month, which was pegged at 25.9p/litre, based on returns from liquid and commodity markets. However, a sharp jump in cheese and butter returns in September boosted the AMPE to 30.4p/litre, indicating that farmgate prices should continue to rise.

This summer’s appalling weather meant milk yields were 2% lower in June than a year ago, with milk from forage down by 13%, said Ian Powell, director of The Dairy Group. “We also saw a 15% drop in milk protein, indicating that cows were short of energy, which is likely to impact on milk production and cow fertility.”

Dairy producers used 10% more concentrate feeds per litre than last year, pushing up purchased feed costs by 0.5p/litre, to 6.8p/litre. As a result, average margins over purchased feed fell by £6 to £130 a cow.

Milk production was likely to continue below par into the winter, with producers’ costs set to remain high.

 

Market report