Dairy trade remains strong despite dismal milk prices

Trade Talk

By Clive Norbury,

Director auctioneer, Beeston Castle Auction, Wright Marshall.

As everyone will be quite aware, dairy farmers are having a really tough time at the moment and the reason for this is quite simply the dreadfully low milk price the majority of farmers are receiving.  As I write, many will be trading at a significant loss, which for some will be quite unsustainable for even a short period of time.

So, how is this effecting prices in the dairy ring? Well, the simple answer is that it is not at the moment!

At our last Mid-Month Focus Milk Sale at Beeston Castle Auction, Cheshire, on 10 March, a huge entry over 400 head met a flying trade in all sections. The sale is the largest collective sale of its kind in the UK and attracts buyers from all over, who are particularly drawn to the large choice and to the renowned quality forward.

There were 163 calved heifers forward, 35 of these made over £2,000, peaking at £2,550 twice, and everything averaged £1,751 a head. That is £140 less on the year, but £130 more than they were three months ago, with each sale since December getting dearer every month. This defies all sensible logic when one considers the milk price has dropped a good eight pence a litre for the great majority.

Prices are driven by supply and demand and at the moment supply is short and demand is strong. Despite all the talk there are very few herd sales about yet, numbers in the market are less, not only here in the UK, but also in Europe too. Just out of interest some 40,000 head were imported from Europe last year, nearly all of which were dairy cattle. With the ending of milk quotas this month, European milk producers are feeling “liberated” and the message being received currently is that they all seem to want to milk more cows having been battling with over production for many years. Consequently, the normal amount of heifers being put forward for sale over there has severely diminished. This is being exacerbated by the fact that they have seen recent prices rise for calved heifers by as much as 500 euros on the month. How long that will last we will have to wait and see. But one thing is for sure, there will far less coming to the UK this year than last.

TB still plays a major role, not only for the demand created from those who have reactors, but also reducing the supply chain from those farms placed under restriction. This has no doubt helped to fuel the rise in demand for European heifers due to the fact that some of those countries, such as Denmark and Germany, are TB free.

Moving forward the next few months will be challenging for many and maybe, desperate for some. However prices for cull cows are good and trade in the calf ring is exceptional, both of which help to put a sound base in the dairy cattle ring. There seems to be plenty of optimism out there, many new entrants investing in the future, which is good for all of us, we just need to get through these next few months and hope the price our hard working dairy farmers receive for their moves up as quick as it came down.