Monthly Commentary on Milk Price Changes

Published 3 December 18

The majority of milk buyers are holding prices for December, but those that have announced price changes are cutting prices in the region of 0.50-1.00ppl. The exception to this is Müller’s Booths contract, which has an announced increase of 1.05ppl. As an aligned contract, this rise is linked to rising costs of production.

In terms of the new year, Dairy Crest Direct have announced a hold on its price, as well as its 0.5ppl supplementary payment. Barber’s have announced a 1ppl price reduction for January, as have Müller. Müller have also announced a 0.5ppl premium, starting in January, for its non-aligned farmers who take part in its three herd health initiatives.

This turning point in farmgate prices reflects the decreasing market returns since September, which are now feeding through to farmers. AHDB’s Milk Market Value (MMV) indicator, based on UK wholesale prices, suggests further downward pressure on farmgate prices as we move into the new year.

The wholesale price shifts have partly been driven by the good levels of milk production. October production levels were at a three-year high for GB, and daily milk deliveries have been running in line with last year so far through November. Additionally, the southern hemisphere has had strong year-on-year growth, with New Zealand having record high production for the past couple of months. The expectation of ample supplies has been adding downwards pressure to dairy markets at a global level, impacting UK markets as well.


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