UK milk flow slows but still above three-year average

British dairy farmers are producing less milk each day than last year, as spring gets off to a slow start. 

UK daily deliveries averaged 40.5m litres/day in the two weeks to 26 March, about 1.1% lower than the same fortnight in 2015.

Bad weather in March could have limited cows’ grazing intake, AHDB Dairy reported.

The latest figures could be an encouraging sign that the high milk production depressing prices is easing back. 

See also: Muller farmers could lose 1.75p litre in Scottish dairy closure

But daily production is 3.3% up on the three-year average as UK production rises towards its annual peak output.

Weak markets are not holding back the milk flood across Europe, said The Dairy Group principal consultant Nick Holt-Martyn.

The EU was on track for 3.5% production growth in the first full season after quotas ended, with Ireland leading the pack with deliveries up 37% in January and February. 

“The commission are adamant that the EU is not to blame, citing growth in New Zealand over the past 10 years as more significant,” he said.

“However, markets are not concerned by percentage expansion, but only by the extra tonnes of dairy product that need to find a home, with 1% of EU production equating to 7% of New Zealand output.”

The Dairy Group’s market price equivalent, which tracks UK cheese, butter and cream values, fell 0.38p/litre on the month to 22.78p/litre in March. 

The GDT indicator, which puts returns from the Fonterra auction into British prices, dropped to 15.5p/litre. 

Futures markets and commodity risk management online course:

  • Risk management strategies for a more predictable financial performance
  • Educated conversations when collaborating with your advisors
  • Negotiate better prices with your grain merchants

View course