Muller drops milk price, but market suggests end in sight

Producers supplying Muller’s Direct Milk DPO will see their formula price drop by 0.09p/litre for milk supplied in July – but it may be the last fall for a while.

This is the seventh consecutive monthly price cut for producers on a formula contract – taking it to 24.38p/litre – and will affect about 200 dairy farmers.

However, Direct Milk’s company secretary, Michael Masters, said this was likely to be the last formula price drop in the current run, due to improvements in the cream market, which affected the formula milk price. 

“Cream today is trading in a range of £950-£1,000/t, and if sustained for June would be a major contributor to an overall potential formula increase within June parameters for August,” said Mr Masters.

Cream markets have been improving in recent weeks as buyers chase limited supplies due to milk production slowing in the UK and the rest of Europe. The fat content of milk is also reported to be down.

Direct Milk is a producer organisation and represents 650 former Dairy Crest suppliers who moved to Muller after it bought Dairy Crest’s dairy divisions in December.  

See also: Muller merger threatens first dairy producer organisation

Previously these farmers were represented by Dairy Crest Direct, which earned official producer organisation status in May 2015.

The rest of Muller’s 1,900 suppliers are represented by a farmer board, Muller Milk Group, which is not independently run and financed, unlike Direct Milk.