With commodity prices boosted, what are the prospects for UK dairy?

Published 2024년 6월 27일

Tridge summary

Wet weather and global production decline have led to a slow start to the milk season, with volumes down by 1.5%. This has caused milk shortages and a rise in commodity prices for dairy products such as butter, bulk cream, and mild cheddar. These increases have supported farmgate prices, with the Actual Milk Price Equivalent (AMPE) and the Milk for Cheese Value Equivalent (MCVE) increasing by 3.5ppl and 1.8ppl respectively in a month. However, the market situation is delicate, with demand being a key factor. While Chinese demand is down due to increased domestic production, UK retail demand for cheese and yogurt is strong. The milk production forecast for the 2024/25 milk year is also revised down by 1.0%.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

The Spring’s (and Autumn and Winter’s) endlessly wet weather did more than dampen spirits. It damaged prospects for turnout, grass growth and ground work meaning the milk season got off to a very slow start with the spring flush being muted to non-existent with volumes back by 1.5%. Global production has also been on a downturn and dropped by 0.5% in April. Shortages of milk have sparked fears for buyers who have finally stopped sitting on their hands and started buying, particularly fats. Latest commodity prices indicate butter is up a significant £580/t, bulk cream £190/t, mild cheddar £130/t with SMP lagging at only £50/t growth. This has boosted both AMPE by 3.5ppl and MCVE by 1.8ppl in a single month. Not quite the heady 5.6ppl growth in AMPE we saw in the volatile days of March 2022 but still impressive. AMPE is The Actual Milk Price Equivalent and is an indicator of the factory gate value of a litre of milk which goes into Butter and SMP. MCVE is The Milk for Cheese ...

Source: Ahdb