UK Wholesale Prices

Published 26 November 18

Market views taken for trade occurring between 1 to 26 November. Prices reported are indicative of values achieved over the reporting period for spot trade (excludes contracted prices).

As ever, the following prices represent an indicative average of UK wholesale markets. The “average” prices should be used to track trends while the commentary will contain prices seen at the end of the month.

All prices quoted are in £/tonne.

There are a number of dynamics at play in the wholesale markets at the moment. Uncertainty over Brexit aside, we have seen fat markets come under downward pressure as food manufacturers look at alternative sources of fat. However, this has been offset towards the end of the month by the pre-Christmas boost in cream demand. SMP prices have strengthened and split from the drag of the intervention stocks, while cheddar prices have eased off the back of increased production.

For the month, our indicative cream price was back slightly on October, but the monthly average only tells part of the story. After hitting prices in the mid to low £1,700’s at the start of the month, cream demand rose as the month progressed. By the end of the period prices were back towards the £1,900 mark. This is partly due to the normal seasonal increase in demand we see on the run up to Christmas. However, it appears cream prices were depressed early in the period due to short-term manufacturing issues.

Butter recorded a more significant drop making cream the more valuable use of fat for the time being. There appears to be a growing divide in the butter market between fresh and frozen supplies. Those looking for fresh stock are being required to pay a premium, whereas frozen stocks appear plentiful.

Fresh SMP markets finally seem to be shaking off the drag of the intervention stocks, with prices increasing to their highest level for over a year. Contributors noted the premium that is now appearing for fresh stocks, and the fact that bids have exceeded available stocks in a number of intervention stores. There is also growing concern for those requiring Red Tractor assured powder given the continual uncertainty of Brexit, helping to pull up prices in the UK.

In general, mild cheddar prices eased back this month, but there was a large disparity of views on how much the market had fallen. Some contributors, at the premium end of the mild cheddar market, reported stable prices, or only minor drops of around £20 per tonne. Others saw the fall as more significant. October had seen some discounted parcels being offered into the market, but this appears to have dried up as we moved through November, offering some stability into the prices later on in the month.

UK Wholesale Table
                          

UK Wholesale Graph 

Notes: Prices have been compiled by talking to dairy product sellers, traders and buyers. Panel discussions on market conditions and prices covered trades agreed for the period 1 to 26 November. The published prices will not necessarily match the actual price received by a milk processor as this will depend, amongst other things, on the proportion of product that is sold on the spot market and the proportion sold under longer term contracts and at what price this is done.