Strengthening UK milk prices narrow the gap to AMPE

Average UK milk prices reached a new record in November, at 29.38p/litre, 3.44p/litre more than the same time last year. However, weakening global commodity markets continued to pressure the Actual Milk Price Equivalent, which fell by 1.2p/litre in December, to 29.9p/litre, 1.8p more than December 2010.

With further price rises in the pipeline for December and January, average farmgate values could exceed the AMPE in the coming months, potentially pressuring UK prices, said a spokeswoman for DairyCo. Muller had already announced a 0.5p/litre drop in its February price, but Milk Link had committed to no price cuts before April – and tight milk supplies would help to support the market, she added.

In November 28% of contracts monitored by DairyCo showed higher prices, with the greatest rise – 1.23p/litre – made by Lactalis. “World wholesale prices have broadly strengthened in the run-up to Christmas, and EU exports have been helped by a weakened euro,” said the report. “There is now a more upbeat expectation of, if not price increases, at least some further global price stability, with a downside risk of modest, rather than dramatic, price reductions.”

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