Dairy markets on the up, but long way to go

There is little doubt that the global dairy commodity markets are moving in a positive direction.


But with the prices of butter and skimmed milk powder on the world market at £1,190/t and £1,293/t, respectively, these markets have a considerable way to rise before they even reach the EU intervention prices of £1,982/t for butter and £1,531/t for SMP. Using these intervention prices, the Intervention Milk Price Equivalent for April is calculated as 19.6p/litre.


It is evident that even with the rises seen on the global markets, it will take EU traders some time, with the help of export subsidies, to clear the considerable volumes of stock now sitting in EU stores.


On a more positive note, the GB market is still helped by a relative degree of isolation. Big cheese buyers are still paying about £2500/t for domestically produced mild Cheddar from factories with a good track record for quality and consistency. This is despite parcels of cheaper imported Cheddar being available for about £2,000/t.


This £2500/t for mild Cheddar converts into a Milk for Cheese Value Equivalent of 24.65p/litre, which gives a 5p/litre premium over turning this milk into butter and SMP for intervention, a factor that is undoubtedly supporting our domestic farmgate price at present.


The returns that can be achieved by processors with existing contracts to produce quality cheese are also helping to prop-up prices in the liquid milk market. Although there is severe competition in the liquid milk middle ground, in recent weeks we have seen companies such as Robert Wiseman Dairies give a guarantee that they will not implement any further price cuts before 31 July. This has to be a positive signal to farmers, with Wiseman’s customers willing to pay a price that will sustain domestic dairy farming through this period of depressed commodity prices.





































































Dairy commodity prices

 

April 2009


March 2009


April 2008


AMPE (p/litre)


19.1


19.6


24.9


MCVE (p/litre)


24.65


24.63


28.67


SMP (£/t)


1,500


1,550


2,000


Butter (£/t)


1,950


1,950


2,150


Mild Cheddar (£/t)


2,500


2,500


2,850


Cream (£/t)


820


780


940

 

April 2009


March 2009


April 2008


Dairy farmer numbers (England and Wales)


11,787


11,827


12,365


Deliveries to Dairies (m litres)


1,143


1,122


1,139

 

February 2009


January 2009


February 2008


DEFRA farmgate milk price (p/litre)


24.52


25.57


25.62


Source: DairyCo





































































































































































































































DairyCo Datum league table (March)

 

Monthly price


Annual average


Dairy Crest M&S – level supply 2


28.64


28.58


DC M&S – variable
supply 2


28.64


28.50


Dairy Farmers of Britain Liquid TESCO 2


28.44


28.44


Dairy Crest Waitrose 2


28.32


28.29


Wiseman Tesco 3


28.19


28.11


Arla Tesco 3


27.55


27.98


First Milk Tesco – profile payment 3


27.79


27.77


First Milk Tesco – dual pricing 3


27.46


27.58


Milk Link Cumbrian Direct Group


27.24


27.24


Wiseman Sainsbury


26.96


26.88


Barber A.J & R.G


26.55


26.52


DC Sainsbury – level supply


26.46


26.40


DC Sainsbury – seasonal supply


26.46


26.31


Milk Link Tuxford & Tebbutt


26.34


26.25


DC cheese Davidstow – level supply


26.30


26.24


DC cheese Davidstow – seasonal supply


26.30


26.16


Lactalis/Caledonian Cheese  profile payment


25.99


26.09


Arla Asda


25.30


25.72


Lactalis/Caledonian Cheese – seasonal supply


25.49


25.69


Grahams Dairies


25.54


25.54


Lactalis/Caledonian Cheese


25.49


25.49


Claymore Dairies


23.61


25.29


Wyke Farms


25.14


25.14


Arla non-aligned


24.60


25.02


Parkham Farms


24.11


24.90


Wiseman Partnership


24.96


24.88


First Milk Highlands & Islands Area – profile payment


24.88


24.87


Wensleydale


24.84


24.84


First Milk H&I Area – dual pricing


24.62


24.83


Meadow Foods level supply


24.80


24.81


Meadow Foods


24.80


24.75


Milk Link London liquid


24.76


24.75


Arla AFMP


24.30


24.72


DC Liquid – level supply


24.76


24.70


Belton Cheese


24.69


24.69


Paynes Dairies


24.65


24.65


DC Liquid – seasonal supply


24.76


24.61


Milk Link northern expansion – seasonal supply


24.54


24.55


Milk Link manufacturing – seasonal supply


24.54


24.40


Milk Link manufacturing – A&B pricing


24.21


24.31


Milk Link northern expansion – A&B pricing


24.21


24.31


Glanbia Llangefni


24.09


24.00


Joseph Heler


24.00


24.00


South Caernarfon Creameries


23.85


23.87


First Milk liquid – profile payment


23.85


23.83


First Milk liquid – dual pricing


23.60


23.81


First Milk compositional – profile


23.58


23.57


First Milk compositional – dual Pricing


23.34


23.55


DFB liquid London premium


22.95


22.91


DFB liquid Midland premium


22.60


22.56


DFB liquid


22.20


22.16


DFB compositional


22.10


22.06


Saputo/Dansco – level supply


21.64


21.64


Saputo/Dansco – seasonal supply


21.34


21.27


2 The milk prices listed above will vary according to the amount of milk that is required by each retailer. Additional milk will be paid for at the conventional liquid milk price of Dairy Farmers of Britain (DFB) and Dairy Crest (DC), respectively. The milk price above assumes that all litres produced are sold into the dedicated milk pools.


3 Farmers signed up with the Promar costings survey get an additional 0.50p/litre


• Milk prices are ranked according to the annual average price that would be paid on a contract for 12 months going forward if the present price schedule remained the same. Prices listed above are exclusive of: Capital Retentions, Administration Charges, Farmer Group Subscriptions, and VAT, but are inclusive of: DairyCo Levy, Seasonality.


• For more information visit www.dairycodatum.org.uk