UK milk production reached a 12-year high for the month in January, at 1.17bn litres – 18m litres more than last month and 111m litres more than last year.

That put cumulative production at 11.3bn litres for the milk year so far, 438m litres more than the same time last year and the highest level since January 2006. However, butterfat contents continued to fall, at 4.07% for the month and 4.01% cumulatively.

According to a report by DairyCo, speculation was now starting about how processors would cope if the trend continued into the spring. “Is there enough capacity and demand in GB to make use of it all, or will supply be managed through price reductions?” the report asked.

If global dairy markets remained strong, the downside to prices should be limited, said the report. “The worry is that UK processors’ ability to direct milk into commodities may be limited by capacity.”

Growing retail milk sales would help use some additional milk, and domestic cheese production could displace imported cheddar, it added. “The key to the balance may be with butter/SMP production.”

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