Average farmgate milk prices fell by 0.38p/litre in January to 33.84p/litre, according to the latest figures from the RPA.

That was 0.69p/litre below the peak reached in November, but still 3.79p higher than the same time last year. Butterfat contents fell to 4.07%, while protein contents averaged 3.29%.

The fall mirrors the weakening commodity markets, with UK butter, cheddar, skimmed milk powder and cream values all falling in February. This meant that DairyCo’s Actual Milk Price Equivalent – based on a basket of commodity prices – dropped by 2.3p/litre over the month, to 35.3p/litre. That was 4.2p below the peak reached in August last year, but 3.9p higher than the same time last year.

“In February, supply outstripped demand for fresh products such as cream, butter and curd cheese, resulting in significant drops in wholesale prices,” said the DairyCo report. “Export demand for powders continues to support this market, although the strengthening of the pound:euro exchange rate has put downward pressure on prices.”

Commodity values at Fonterra’s latest auction dropped by 4% to a weighted average of US$4,794/t (£2,874).