Milk buyers hold December prices despite weaker dairy markets

Most major milk buyers are holding December prices, despite a shock 7p/litre cut by liquid processor Freshways from December, although falling butter and cream values are raising concerns over farmgate returns into 2027.

Muller, First Milk and Barber’s Cheesemakers have all confirmed December price holds, while Arla reduced its conventional milk price by 0.45p/litre for November.

See also: Freshways cuts milk price by 7p/litre in ‘brutal’ move

The latest moves reflect a mixed dairy market, with weakness in butter and cream contrasting with improving skimmed milk powder (SMP) values.

Arla’s conventional headline price for November is 40.41p/litre, while its organic price remains unchanged at 58.25p/litre.

Muller suppliers meeting the conditions of its Advantage scheme will receive 37.5p/litre in December, while First Milk is holding its standard manufacturing litre at 39p/litre, including the member premium.

Barber’s is also holding its December price at 40.11p/litre, or 39p/litre for its lower-constituent standard litre.

Market analyst Chris Walkland warned that further cuts in January could not be ruled out if commodity markets failed to recover.

“The cream price is pretty bad, and butter in Europe, which relates to it, isn’t particularly brilliant,” he said.

“I don’t think we can rule out further reductions for January if commodities don’t pick up soon.”

‘Brutal’ 

The Freshways 7p/litre cut followed a recent 9p/litre autumn price rise, taking its base price to 29.4p/litre.

Managing director Bali Nijjar said expected improvements in dairy markets had failed to materialise, particularly for dairy fat, while liquid milk selling prices had not risen to reflect higher farmgate costs.

Mr Walkland described the Freshways’ reduction as “brutal”, saying it would be particularly difficult for farmers already facing additional production costs.

He said the cut had landed badly on farms, especially as other processors appeared to be holding prices for December.

He added that Freshways’ decision to increase its price by 6p/litre in October, following a 3p/litre rise in September, had left it exposed when expected improvements in dairy markets failed to materialise.

NFU Dairy Board chairman Ian Harvey described Freshways’ significant milk price cuts as “hugely disappointing”, especially at a time when confidence in the sector is already at rock bottom.

“Like all farmers, dairy producers need confidence to plan, invest and grow their businesses. Sudden and substantial price reductions undermine that confidence.”

Milk supply

On a more positive note, Nick Holt-Martyn of The Dairy Group said European milk supply had finally fallen below year-ago levels, with September volumes 0.4% lower than in 2025.

However, this tightening had coincided with weaker commodity markets, particularly for dairy fat.

He said UK milk supply was also falling, with October deliveries estimated to be 4% lower year-on-year. The lower supply should eventually support a recovery in wholesale markets, although the process could take time.

Despite this, Michael Masters of Barber’s said UK milk volumes remained above the five-year average, contributing to softer dairy markets.

He warned that if current conditions continued, milk returns would face greater pressure going into 2027.

AHDB figures show UK bulk cream averaged £1,528/t in October, down 11% on the previous month, while butter fell 7% to £3,300/t. In contrast, SMP rose 7% to £2,930/t.

The Dairy Group’s latest Market Price Equivalent (MPE) fell 0.62p/litre in October to 41.16p/litre, although it remained 1.6p/litre higher year-on-year.

Mr Walkland added that the outlook would depend on whether commodity values recovered soon enough to support farmgate prices. “Whether that will happen or not, I don’t know.”