Weather puts global milk supplies under pressure

Dairy commodity prices are continuing to rise, with global milk supplies under pressure due to poor weather and soaring input costs in the USA and Europe.

Between July and August, British butter values increased by £125/t to £2,350/t, with skimmed milk powder up by £200/t to £2,000/t and cream rising by £100/t to £1,100/t. As a result, the DairyCo actual milk price equivalent jumped by 2.5p/litre, to 25.9p/litre. However, that was still 6.4p/litre below the price at the same time last year.

Average farmgate milk prices appeared to have bottomed out at 26.17p/litre in June, with Defra’s latest figures showing an increase to 26.38p/litre in July.

“While current market trends are positive, the picture moving forward is unclear,” said the DairyCo report. “Milk supply is an issue and at a UK level availability is likely to be limited until the end of 2012.

“On the other hand, Private Storage Aid stocks of butter are more than 130,000t. There is also the ongoing challenge of exchange rates with sterling trading high against the euro. Therefore, the market will continue to be volatile and should be watched closely as we head into the autumn.”

Market report