DairyCo’s latest milk price league table showed 40 price changes between November and February, with most increases of 1-3p/litre from October to December.

“Many of the price increases have been attributed to improved returns from markets,” said the report. “It is also possible that price increases have been made in an effort to encourage milk production. While UK milk production has gone through the seasonal trough, recoveries in supply have so far been sluggish.”

With 2012 the second wettest on record in the UK, the effects were likely to be felt well into the new year, as ground water levels in certain parts of the country were at their limits, it added. “Feed availability and/or feed quality is a challenge many farmers will be facing, with feed costs coming under further upward pressure as a result.”

Tight milk availability would therefore play a key part in future price changes, with global commodity markets also an important factor. “The southern hemisphere has moved past its seasonal peak, with reports from New Zealand suggesting production levels may fall below the previous year for the second half of the season.”

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