Milk hopes fading
Milk hopes fading
By Olivia Cooper
HOPES of a rise in milk price are fading, despite latest figures showing that milk production continues to fall behind quota.
Even if milk supplies dont reach quota, a price rise now seems unlikely. Two dairy companies have announced they will hold prices, but there is concern that the market is under pressure and supermarkets will not increase the cost of milk in stores.
The Intervention Board puts September production at just over 1bn litres, 75m cumulative litres ahead of last year. Consultant Charles Holt says that although September production was above last year, it is still 31m butterfat-adjusted litres below profile, bringing the cumulative deficit to 156m litres for the year.
"This is much as expected – although individual cows are milking extremely well, foot-and-mouth has taken so many out of production that it is going to be difficult to reach quota."
Even so, Martin Young, of co-op Milk Link, says that international product prices, like cheese and milk powder, have fallen, and supermarkets are "not forthcoming" on liquid milk values.
"Milk Link has not dropped prices, but with more milk around than expected, and falling product values, all the indicators point towards pressure on the market."
Two of the largest dairies, Express and Dairy Crest, say they have no plans to change milk prices this month. However, co-op The Milk Group declined to elaborate on speculation that it was going to cut prices.
Just to confuse the market further, co-op Zenith plans to increase milk prices, due to "improved running of the business", not through worries over production, said a spokeswoman.
Meanwhile, quota market has been strong, although supplies are tight. "There has been a lot of activity recently – prices have increased to about 17.5p/litre for 4% butterfat," says Tony Carver of Carver Knowles.
"But this is not in reaction to the September figures – people are looking to buy large amounts of quota in order to expand production in the long term." Consequently, leasing markets have slumped to about 0.6p/litre. *