Market report: Dairy recovery continues

UK butter and skimmed milk powder prices have increased sharply in recent weeks, helping to push the Actual Milk Price Equivalent to where it was 12 months ago.

According to DairyCo Datum reports, butter prices climbed by £610/t (30%) between August and September to £2650/t, while SMP was up £100/t (7%) to £1550/t. Cream also strengthened by £400/t (42%) to £1350/t.

This was partly due to the weakening of sterling towards the end of the period – but only partly.

This currency effect was enough to put £80/t on the intervention price of butter and £50/t on the intervention price of SMP. “But this is academic, as UK commodity market prices have moved up sharply, as have prices in other parts of the EU,” says DairyCo, pointing to lower levels of production.

Expressed in terms of milk value, the AMPE rose by a significant 3.8p/litre in September to 23p/litre – close to the 24.9p/litre it was valued at a year ago. This is substantially above the 19p/litre Intervention Milk Price Equivalent.

But DairyCo also notes that “milk producer prices have not yet reflected the improving situation in the commodity markets”, being 11% down on year-ago levels.

* For a FW comment on the EU dairy market situation, see Phil Clarke’s Business Blog