Market report: Milk prices edge upwards

Average farmgate milk prices are starting to rise, reflecting buoyant dairy commodity markets worldwide.

DEFRA’s latest published ex-farm price increased from 23.57p/litre in April to 23.63p/litre in May. That was 0.37p/litre higher than the same time last year, but still 0.5p/litre below the March price.

Nick Holt-Martyn, Director of The Dairy Group, said prices should now rise for at least six months. “With further price rises likely in the cheese sector and higher liquid returns from cream, the liquid buyers should increase the price they pay to farmers. With limited dairy product supplies worldwide until the southern hemisphere new season takes off, markets are likely to remain firm.”

The Dairy Group’s Market Price Equivalent, calculated from weighted wholesale prices for liquid milk, cheese, butter and powders, increased again last month, to 27.73p/litre. That was 3.28p/litre higher, year-on-year. “With the time lag between markets and the farmer of around four to six months and returns currently 3.3p/litre up on June 2009, the price paid to farmers is currently 2p/litre below their market return equivalent.”