Monthly Commentary on Milk Price Changes

Published 6 August 18

Dairy processors increased farmgate prices further in August, with price increases ranging between 0.33ppl (for Tesco contracts) to 1.75ppl (for Dairy Crests’ Davidstow contract). Bar the cost of production contracts, these rises follow on from previous wholesale price movements. AHDB’s Milk Market Value (MMV) indicator suggested increases in August, based on UK wholesale prices rises between April and May.

More recently, wholesale prices have been easing but the MMV suggests there could be more positivity for farmgate prices in the coming months. As well as this, there is concern over the impact of the weather on milk production. Many dairy farmers have been feeding forage that is supposed to be saved for this winter, which has been keeping milk production from falling too dramatically. However, the knock-on effect could see milk production fall in the autumn/winter, depending on what feed is available, how much it will cost and how long the winter will last.