An Arla tanker© Tim Scrivener

The UK’s largest dairy co-op Arla has held its milk price for May following a strengthening of dairy markets.

The processor’s 2,400 British dairy farmers will continue to receive 27.43p/litre for manufacturing litres at 4.2% butterfat and 3.4% protein.

See also: Arla launches plan to save £350m from European business

For ease of comparison, the liquid price will be 26.39p/litre for liquid litres at 4% butterfat and 3.3% protein.

The shoring up means the Arla price will have seen two consecutive months of welcome stability for the first time in 2018, having previously seen the manufacturing price falling by 5.2p/litre since January.

“Commodity markets and prices remain stable and we have seen some strengthening in recent days as milk production volumes remain low, due to the recent adverse weather conditions,” said Arla Foods amba board director, Johnnie Russell.

Expert market analysis

Peter Meehan, senior commodity analyst – Dairy at INTL FCStone

European dairy commodity prices have seen some support over the past couple of weeks, reflecting the market’s concerns of reduced milk supply across parts of Europe.

The exceptionally cold, wet weather during March and much of April has resulted in milk collections dropping off for the UK along with France and Ireland.

The expectation at the start of the year was that there would a big supply of milk coming on stream across Europe as we moved towards the flush which would in turn see milk prices decline.

This has not been the case due to the inclement weather experienced in March and April.

The result of this is over the past three weeks the European dairy quotations have moved higher with commodity butter prices climbing 12% and skim-milk powder (SMP) also finding some support over the past couple of weeks, moving up 3% last week (week commencing 16 April) alone.

EEX Dairy Futures are suggesting trend this will continue. Demand for European dairy commodities has remained firm with the latest data showing EU butter exports in February up 18% on last year, SMP exports up 16% and both cheese and whole milk powder exports increasing by 4%.