Milk to feed price ratio under pressure

Published 16 October 18

UK production kept up through the summer despite the challenging weather conditions, but concerns remain over milk deliveries over the winter. With the possibility of higher feed costs, and with milk prices facing some downward pressure, the opportunity for farmers to realise a return through the autumn and winter months will be challenging.

Following on from the weakening in commodity prices seen from early September, market-related farmgate milk prices are likely to come under downward pressure after November. Of course, some buyers will move earlier and some later, all depending on the markets they are operating in, and how exposed they are to market movements.

Concentrate prices have been rising through the year, with September prices estimated to be up 9% on last year. Based on current trends in cereals and oilseeds markets, concentrates could see further rises through the winter, leading to a drop in the Milk to Feed Price Ratio (MFPR) of around 5% by December*.

MFPR Projection

Historically, the result of tighter margins has been a reduction in milk yields, with estimates suggested a drop of 2-3% for every 10% increase in concentrate prices.

How much of an impact we see will in the coming months will depend on how far out of kilter feed and milk prices move in the next few months, and how well stocked farmers are with their feed requirements.

AHDB’s feed cost calculator that can be accessed through the website.

*Assuming the average milk price in the country remains unchanged