Dairy commodity rises point to farmgate increases

Dairy commodity values increased again in August, putting further pressure on processors to raise farmgate prices.

Between July and August, cream values rose by £30/t, to average £1,720/t, while butter prices increased by £50/t to £3,650/t. Skimmed milk powder markets remained static at £2,800/t, but cheese values also rose, with mild and mature cheddar up by £75/t; to £3,400/t and £3,600/t, respectively, said a DairyCo report.

The Actual Milk Price Equivalent (AMPE) rose from 39.3p/litre to 39.5p/litre in August, compared to a July farmgate value of 31.37p/litre.

But, according to Nick Holt-Martyn at The Dairy Group, farmers should not base price expectations on the AMPE. “Very little milk is actually made into AMPE products and sold into commodity markets,” he said. Prices were more driven by the far less volatile cheese sector, with liquid milk accounted for 84% of sales during the autumn.

“For most UK farmers the best indicator will be mature Cheddar or our cheese/butter Market Price Equivalent, combining mature and mild cheddar with whey and butter.” August MPE rose 0.54p/litre, to 33.31p/litre.

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