New Year milk price drop for Barbers suppliers

Cheesemaker Barbers is dropping its milk price in January by 1p/litre to 28.8p/litre.

The processor cites the need to remain competitive in an unhelpful market as the reason for the drop and points out that its milk producers have had a four-month run of stable prices.

The 28.8p/litre price is for supplies at 3.043% butterfat and 4.52% protein.

On the standard litre (4.2% butterfat and 3.4% protein), this equates to 29.65p/litre or 31.35p/litre if milk continues to be delivered at October’s fat and protein levels.

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UK milk production reached a three-year high for the month of October but tight forage stocks and high feed costs could rein back EU milk production over the winter, while much-reduced skim milk powder stocks give hope for a better market balance, says the cheesemaker.

Expert market analysis from senior commodity analyst Peter Meehan, of broker Intl FCStone

Volatility remained high in global dairy markets over the past week, with New Zealand data weighing on market sentiment.

New Zealand milk production in October (its peak milk producing month) posted a new record, putting collections after five months of its 2018-19 season 5.8% ahead of last year.

New Zealand’s pasture growth conditions have also been exceptionally good for the season to date, which has led to the expectation that strong milk production will continue over the coming weeks.

The country’s dairy exports were rather negative in October, with whole milk powder (New Zealand’s biggest dairy export) and skim milk powder (SMP) exports down sharply compared with last year, which may also weigh on the global commodity market.

Closer to home, milk production in Europe for September showed the effects of the hot, dry weather experienced earlier this year, with collections down slightly on 2017.

Lower milkfat and protein content pulled EU milk solid collections down even further for the month.

EU dairy export numbers for September, meanwhile, were quite robust, with SMP exports particularly strong.

This, coupled with further-diminishing Intervention SMP stocks, appears to be supporting SMP prices both on the physical and futures markets.