Dairy markets stable as EU milk peak passes

By Helen Eustace, DairyCo


Global commodity market prices are showing signs of stabilising as the EU milk production season passes its peak and before the Oceanic season begins in earnest.


However, price predictions for the coming months are mixed, with some analysts predicting higher global prices because of relatively low milk production in key exporting countries. Other analysts suggest that a short-term rise in prices is less likely with the USA reintroducing its version of export subsidies and the latest Fonterra auction recording a further fall in price for whole milk powder.


Closer to home, the beginning of the soft fruit season has meant that bulk cream prices are edging closer to £1000/t, from £870/t in May. With falling incomes from cream being widely cited as a reason for price cuts on liquid milk contracts earlier in the year, this upward movement should help prevent further cuts in the coming months.


Despite April milk production increasing on last year, May’s milk production returned to the declining trend. UK production for May totalled 1.2bn litres, 28m litres (2.3%) lower than last year. There was a much smaller drop in Britain of just 1.1% year-on-year, whereas Northern Ireland’s production fell 8.1% – affected by poor weather and possibly poor prices. The average farmgate price in Northern Ireland was about 8p/litre lower than the UK for March milk.


Although it is still early days, the quality of first-cut silage looks more promising than recent years. With feed prices remaining high, it is likely that many farmers will take advantage of better quality silage and feed less bought in feeds later in the year to reduce pressure on margins. This may result in yields remaining similar to last year, or decreasing further, suggesting that we are unlikely to experience a large increase in production in this milk year.










































































Dairy commodity prices

 

May 2009


April 2009


May 2008


AMPE (p/litre)


19.5


19.1


26.2


MCVE (p/litre)


24.73


24.65


29.56


SMP (£/t)


1500


1500


2100


Butter (£/t)


2025


1950


2225


Mild Cheddar (£/t)


2500


2500


2850


Cream (£/t)


870


820


980

 

May 2009


April 2009


May 2009


Dairy farmer numbers (England and Wales)


11,779


11,787


12,309

 

May 2009


April 2009


May 2008


Deliveries to dairies (m litres)


1,198


1,144


1,226

 

April 2009


March 2009


April 2008


Defra farmgate milk price (p/litre)


23.26


24.37


24.95


Source: DairyCo


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