First Milk has become the second major UK dairy processor to hold its May milk price this week, following Arla’s price freeze on Tuesday (24 April).
The British farmer-owned co-op announced it will continue to pay its 900 dairy farmer-owners its standard litre price of 26p/litre for milk with constituents of 4% butterfat and 3.3% protein.
For ease of comparison, the co-op will pay 26.88p/litre on manufacturing litres of 4.2% butterfat and 3.4% protein.
“The fact that we are able to hold our milk prices for May will be welcome news for our members following such a late spring,” said Jim Baird, vice-chairman and farmer director.
“We will continue to drive business performance to deliver more stable and competitive returns to our members.”
The announcement comes a week after First Milk revealed it would be selling two of its Scottish creameries in Campbeltown and on the Isle of Arran.
Expert market analysis
Peter Meehan, senior commodity analyst – Dairy at INTL FCStone
European dairy commodity prices have seen some support over the past couple of weeks, reflecting the market’s concerns of reduced milk supply across parts of Europe.
The exceptionally cold, wet weather during March and much of April has resulted in milk collections dropping off for the UK along with France and Ireland.
The expectation at the start of the year was there would a big supply of milk coming on stream across Europe as we moved towards the flush which would in turn see milk prices decline.
This has not been the case due to the inclement weather experienced in March and April.
The result of this is over the past three weeks the European dairy quotations have moved higher with commodity butter prices climbing 12% and skim-milk powder also finding some support over the past couple of weeks, moving up 3% last week (week commencing 16 April) alone.
EEX Dairy Futures are suggesting this trend will continue. Demand for European dairy commodities has remained firm with the latest data showing EU butter exports in February up 18% on last year, SMP exports up 16% and both cheese and whole-milk powder exports increasing by 4%.