Weak dairy commodity markets cause price pressure

Strong milk production and weaker commodity markets continue to filter through to UK farmgate prices, with many price drops recorded in DairyCo’s latest league table.

AMCo and Arla Milk Link reduced the price for various contracts by 1.27p/litre from 28 April, with Arla, Dairy Crest and Muller Wisemans’ Sainsbury’s contracts all down by 0.56p/litre from 1 April. However, there were some price increases, said the report. First Milk and Muller Wiseman Tesco prices rose by 0.51p/litre, with two other Muller Wiseman contracts up by 1.1p/litre.

“While there remains some support for UK milk prices due to the recruitment activities of large milk buyers, price reductions in Europe have fed their way through to the UK market via the Arla ‘on-account’ price paid to all of its member farmers, irrespective of nationality,” said the report.

UK milk production peaked at 1.33bn litres in May – 8% more than last year, it added. “With EU milk production moving towards its peak, processing capacity on the Continent was reported to be stretched, putting downward pressure on prices.”

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