Market report: Dairy product prices stabilise

Butter and skimmed milk powder prices seem to have stabilised in recent weeks, easing fears that some milk producers could face price cuts this spring.

Official data from DairyCo show that the Actual Milk Price Equivalent of butter/powder slipped between January and February by 4% to 24.10p/litre.

This reflected a £300/t drop in the price of UK bulk butter to £2400/t, with domestic markets following the decline in Continental dairy markets that got under way last November.

But market reports suggest this slippage has come to an end, with German butter prices levelling out at €2800/t in February and skimmed milk powder prices enjoying a small increase in the last days of the month to €2000/t – about 15% above intervention.

This has been brought about by the tightening of milk supply during the harsh winter weather, say analysts.

And, with sterling now weakening again in the foreign currency markets, due to recent fears about a hung parliament this summer, UK dairy values have also seen some upturn.

Meanwhile, this week’s auction of whole milk powder by New Zealand co-op Fonterra saw prices increase slightly – up 0.8% to $3261/t – the first increase for three months.

* For regular comment and analysis on UK agri-business, see Phil Clarke’s Business Blog