Milk prices hit their highest ever level for August at the latest United Dairy Farmers‘ auction, averaging 29.53p/litre.
The auction traded 40m litres – 3m litres less than in July, with prices rising by 0.02p/litre on the month, and 5.4p year-on-year. “The seasonal fall in milk supplies helped offset the impact of weaker international markets and adverse exchange rate movements,” said chief executive David Dobbin.
“While the UK cheese market has remained relatively firm, powder and butter returns from international markets have weakened, led by falling Fonterra auction prices, slow demand and increased global milk production.”
Fonterra values for milk powder and butter had fallen by 13% and 20%, respectively, in the past two months, while UDF prices had improved by 6%.
“A gap has opened up between Fonterra prices and European product, which cannot be sustained in the longer term. With the influence of southern hemisphere producers increasing as their production rises, there is a likelihood that EU returns will be reduced unless we see a recovery in the Fonterra auction.”