Milk prices lag behind market returns

Milk prices should have reached record levels in April, but continue to lag behind market returns, according to The Dairy Group.

Its milk price equivalent, calculated from the weighted actual wholesale prices for liquid milk, cheese, butter and powders after processing costs, and accounting for 90% of the UK market utilisation of milk, exceeded 30p/litre for the first time ever in April, at 30.15p/litre.

“The northern hemisphere spring flush has passed and markets are still rising, with butter and cream hitting new highs due to the rapid fall from peak production,” says director Nick Holt-Martyn. “The market tone is set for the summer period and there is little expectation of any significant decline in wholesale prices until the southern hemisphere season gets underway from October onwards.”

However, farmgate prices averaged just 26.41p/litre in April, dropping to 26.35p/litre in May, according to Defra statistics. Over the past year, the gap between the MPE and farmgate prices has widened from just over 2p/litre to 3.74p/litre, suggesting further price increases are overdue.