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 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 3 • 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
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