UK Wholesale Prices

Published 26 May 17

Market views taken for trade occurring between 1 to 25 May. Prices reported are indicative of values achieved over the reporting period for spot trade (excludes contracted prices).

“Insane market." "Unprecedented price increases." "Desperation prices becoming the actual prices." "Topsy-turvy market.”

These are just some of the quotes from traders involved with the AHDB Dairy wholesale survey. It has been a month of such confusion and high levels of price increase that we would advise caution for any users of the average prices. The markets have changed so quickly, that the average butter and cream prices do not fully reflect the range of spot prices and overall market sentiment. It is important to compliment the monthly averages with information about the ranges of prices in this commentary.

Markets saw some stability in the first week or so of May before dramatic changes occurred and prices shot up. It would appear a number of buyers were expecting some price decreases, on the back of EU flush milk. However, lack of available stocks and lower than expected milk production across most of the EU caused buyers to cover off short-term requirements. Due to the nature of buying short-term and issues with product availability, prices increased quickly in a demand led market. As well as this, another positive impact for UK prices was a further weakening of Sterling.

Fat markets saw the largest changes as demand drove increases in a very tight market. Butter started the month at around £3,750-3,800/tonne before rising towards levels of around £4,800. 

The cream market painted a similar picture. Prices started mid-£1,700s before breaching the £2k mark in the last week or so of May, ending up as high as £2,200/tonne according to some reports.

SMP did not alter as much as the fats, however, positive movements did occur. Currency was the biggest driver for change along with sentiment over reduced milk supplies. Prices started around £1,450 and picked up some £200 through the month towards £1,650/tonne.

Cheese prices across the EU and for most varieties have been increasing in May. Mild cheddar followed suit and saw a turnaround, following a few months of price reductions. It would appear stocks are being built; however, most of that product already has a sale agreed. Prices rose around £200 in the month and the average May price increased £100 compared to April. 

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 25 May. 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. 

AHDB has made the decision to suspend publication of wholesale mild Cheddar prices as of January 2016 due to the lack of spot trade and the inability to quote a price representative of completed spot deals.

The lack of trade has highlighted limitations of the spot price and increased the risk of misperceptions of what the price represents. In Cheddar markets, where a large proportion of sales will be on contract, spot prices can vary significantly from contracted prices – especially when stock levels are out of kilter with demand. More information available.

AHDB Dairy will continue to monitor Cheddar markets and gather intelligence from the trade on activity in this market. However, to avoid misunderstanding we have taken the decision to share price information only after the opportunity to discuss it on a one-to-one basis.

We will continue to work with the industry to improve the reporting of wholesale Cheddar prices, with the aim of beginning to publish the prices again in the future. Anyone who is interested in receiving the average spot price for mild Cheddar, or in helping AHDB improve the price reporting process should email with their contact details.