Monthly Commentary on Milk Price Changes

Published 6 June 18

June saw a couple of increases come into effect with Arla (1.15ppl) following Müllers (0.75ppl) announcement. Most other processors held off increases for the moment.

As well as price announcements, Meadow Foods confirmed a fixed price deal for its 650 producers. Farmers will see approx. 2.6% of the milk they produced between April 2017 and March 2018 locked into a two-year deal (July 2018 to June 2020) for a set price of 28ppl. The deal is automatically applied however producers can opt out by 8 June 2018.

Milk production has been lower than expected, due to poor weather, but production peaked later than last year, closing the year-on-year deficit towards the end of the month. Spot milk prices (in May) were around 22-25ppl suggesting demand for “extra milk” is not there with most processors running close, if not at, capacity. Therefore, it is unlikely many would have managed to benefit from low spot milk prices and higher market returns.

However, wholesale spot prices rose in between April and May. Sellers are in a strong position with butter and mild cheddar as little/no stocks available so they can afford to hold off striking deals if the price is not right for them. Cream went from strength to strength through the month with good demand present. SMP saw a significant jump in price (in percentage terms) due to tight stocks of fresh product and more interest in intervention tenders.