First Milk holds June milk price as dairy markets weaken

Dairy processor First Milk has announced its member milk price will be held at the current level for June 2020.

It means the price for a liquid standard litre will remain at 26.75p/litre and its manufacturing standard litre will be 27.63p/litre.

Despite the price hold, the farmer-owned co-op’s vice-chairman, Jim Baird, warned of continuing uncertainty in dairy markets.

See also: Dairy farms to get up to £10,000 to offset coronavirus cost

Mr Baird said food service sector demand had fallen sharply since the coronavirus lockdown began.

“It remains hard to determine what the total impact of Covid-19 will be on dairy markets in the UK or globally in the months ahead,” he added.

First Milk’s price hold comes after Meadow Foods announced a price cut last week.

Meadow Foods told its suppliers on 30 April that the weakened market had forced it to cut prices for a standard litre by 1p/litre to 25p/litre in May for its Cheshire and surrounding milk fields, and by 2p/litre in Cumbria, Lancashire and south Wales to 22p/litre.

Chief executive Mark Chantler added that the June price would not be announced until later this month due to an uncertain market outlook.

“We will be leaving any price announcements until later in the month, to give us as much visibility of the market ahead as possible,” Mr Chantler said.

Gloomy dairy outlook

Looking ahead, AHDB Dairy suggested the EU milk price equivalent was expected to decline in the coming months in line with the downward trends in butter and skimmed milk powder pricing.

The sector board’s senior analyst, Patty Clayton, said: “With stocks expected to build for these products, and global demand to remain subdued, these trends are likely to continue over a longer period.” 

Ms Clayton added that the coronavirus pandemic had caused a downturn in forecast production.

Suggested milk production across the EU-27 was likely to be lower than earlier predictions due to the pandemic, she said.

Milk production is projected to expand by a modest 0.4% in 2020, similar to 2019 increases.

This is less than previously forecast, as growth in yields could be limited by compound feed shortages, processor-driven milk reduction schemes and the potential drop in the size of the dairy herd, Ms Clayton explained.

Upcoming webinar

SEPTEMBER
30

What does the future of farming look like post Covid-19 and Brexit?

Register today