The Dairy Crest/Dairy Crest Direct (DCD) formula milk price will fall by 0.348p/litre to 27.44p from 1 September.
About half of DCD’s producers are on standard liquid milk contracts and about half of those in turn have opted to put some of their volume on the formula contract.
This bases the farmgate price on wholesale dairy product prices and milk production input prices.
DCD company secretary Michael Masters said that even after the reduction the formula would deliver above the average farmgate price.
However, the differential between the standard DC liquid contract price and the formula price would grow in September to +5.63p/litre.
Four of the five elements making up the calculation of the DCD formula fell in value during the review period – cream, concentrate feed, fertiliser and red diesel.
The formula also takes account of the retail price of a four-pint milk pack, which while unchanged on the previous review remains at 98p – the lowest for 12 years.
In its formula outlook accompanying the price cut, DCD warned that further formula price reductions must be expected on August data which would affect prices from October – cream market prospects remained under pressure, and concentrates and fertiliser were still falling.
In underlying feed ingredient markets, soya was at a three year low and if reductions in rape meal and feed wheat prices were sustained, this could also impact ongoing formula returns, it said.