Market report: Milk prices lagging behind

Farmgate milk prices are slowly improving, but still lag well behind actual commodity market returns, according to DairyCo.

Its latest milk price league table showed a number of changes in July, with 11 milk buyers raising the price by between 0.25p/litre and 1p/litre. The average July price stood at 24.11p/litre – well below the actual milk price equivalent (which measures market returns) of 29.6p/litre in August.

“This suggests the farmgate price is still falling short of where it should be, raising some hope that over the coming months prices will rise further.”

Most buyers were paying an average of 23-25p/litre based on the DairyCo standard litre, said the report. “The liquid premium has lost some of its lustre: the three main standard liquid milk contracts are surrounded by cheese/manufacturing contracts.”

Dairy Crest’s annual average liquid contract had fallen into the second half of the table, at 24.04p/litre, something not seen for some time. Most of Milk Link’s contracts had risen into the top half of the table, following the latest 0.75p/litre increase.