Forward milk auction contracts show signs of stability

UK milk prices fell by 0.76p/litre in April, to average 27.91p/litre ex-farm – 1.5p/litre more than the same time last year. GB values remained better supported than Northern Ireland’s prices, at 28.46p and 24.99p, respectively, due to Northern Ireland’s greater reliance on commodity markets.

The Dairy Group’s Market Price Equivalent (a basket of liquid and commodity prices reflecting actual market returns) rose by 0.16p/litre in May, with better cream and whey prices outweighing weaker butter and mild cheddar markets. However, at 25.96p/litre it was now 3.4p/litre down on the year, said consultant Nick Holt-Martyn.

Over the next two months the recent milk price cuts would take effect, halting the rolling farmgate price at 28p/litre. Milk production in Europe had stabilised, and with the end of the southern hemisphere year approaching global production growth should slow, he added. “Market stability looks the order of the day, albeit with commodities returning 22p/litre and liquid and cheese 27p/litre. At Fonterra’s auction the six-month contracts are running 3% above two-month contracts, suggesting the major price falls are past and stability will be subject to the level of milk supply going forward.”

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