How could high feed costs impact the milk to feed price ratio?

Published 2 August 18

Feed prices have been on the rise in recent months, with average concentrate prices increasing by £25/t since the start of the year. Weather concerns and trade turmoil has driven up raw ingredient prices, and now with the additional pressure on winter supplies due to the drought, managing feed costs is a key priority. In this article, we examine how the relationship between concentrate prices and farmgate milk prices could develop over the next few months if feed prices rise.

Industry reports suggest that concentrate prices are likely to be in the £240-250/tonne region over the winter period. To see how this hike in prices could relate to milk prices, we have created a theoretical concentrate price* and compared them against the projected farmgate prices.

Projected price movements in farmgate milk prices are positive, with prices expected to increase into the autumn. Meanwhile, the theoretical concentrate price suggests that feed prices could move up by around £3/tonne per month, to hit £240-£250 mark by the winter.

Using these assumptions, the Milk to Feed Price Ratio (MFPR) continues to track below the 5-year average, although it could recover to some degree. This indicates that the forecasted rise in milk prices could somewhat compete for potential rising feed costs. However, future weather conditions could change this.

MFPR Scenario graph

With upwards pressure in both feed and milk markets, it is important to see how these changes related to each other. Check out the milk-feed price ratio webpage for monthly updates to see how the relationship develops.

*A theoretical concentrate price based on the 5-year monthly average price and the standard deviation to create a hypothetical high concentrate price.