Milk prices creep up as dairy commodity values rise

Three milk processors have announced farmgate price rises as the dairy industry recovers from the coronavirus crisis.

Pensworth dairy announced a 1p/litre price rise for this month to take its price to a 16-month high of 26p for a standard liquid litre.

The price includes the company’s 0.5p/litre Compassion in World Farming bonus, and it is the third month in a row that the firm has increased prices after slashing them sharply during the coronavirus crisis in the spring.

See also: Dairy hardship fund deadline extended to 11 September

Elsewhere, manufacturing firm Glanbia Cheese pledged a price rise of 1p/litre for this month, taking its price up to 27p for a standard manufacturing litre, while Saputo Dairy UK said it would increase its price by 0.5p/litre from October.

The firm had been in a formal negotiation deadlock with its supplier group Dairy Crest Direct after failing to put its price up in August, despite reportedly strong sales of its flagship Cathedral City cheese.

A raft of other producers have held their prices at current levels, including Meadow Foods, Yew Tree Dairy, Freshways and Medina.

Rising commodity values

Peter Meehan, senior commodity analyst at financial services network StoneX (formerly INTL FCStone), said that the value of dairy commodities is rising slowly.

“After six consecutive weeks of price stability, the European butter quotation finally made a move, albeit small, to the upside this week (+0.2%).

“The European Butter quotation has now gone 19 weeks since it last saw a move lower, posting 13 weeks of gains in that period sitting €808 (+31%) above where it was in mid-April, but €248 (-7%) below where it was at the end of January,” said Dr Meehan.

Skimmed milk powder and cream prices have also risen in recent weeks and demand for milk has not been outstripped by rising production, he said.

Milk collections for the EU-28 were up 1.2% in June, putting collections for the first half of 2020 1.6% ahead of last year, but recent hot weather across the continent will have dented production, giving processors confidence to raise prices.

Hardship fund deadline nears

Farmers are now in the final month of being able to claim compensation from Defra for losses sustained during the sharp price falls in the spring.

MIlk producers who saw their price fall by more than 25% between March and April have until 11 September to claim for up to 70% of the losses sustained, up to a total amount of £10,000.

The scheme has been criticised by farming unions for excluding many farmers who endured steep price cuts but have fallen outside of the eligibility criteria.

More information is available on the Defra website.

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