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UK Wholesale Prices
Published 27 January 17
Market views taken for trade occurring between 1 to 27 January. Prices reported are indicative of values achieved over the reporting period for spot trade (excludes contracted prices).
Signs of rising milk production and strengthening Sterling both impacted on January wholesale figures. Cream saw the biggest impact, while SMP and Cheddar remained pretty stable.
Cream prices fell through January, with a £200/tonne difference between highest and lowest prices quoted by traders. Prices fell through the month as better signs of milk production and currency movements placed pressure on the market. Trade was largely reported as consistent over the month.
The butter market eased in January due to currency movements and increased activity on the continent, mainly from Poland to Western Europe. More milk has been available so butter production has risen. However, limited stocks are available so demand is largely being satisfied by current supply. Butter is now offering a premium to cream in terms of butterfat equivalent*.
The average SMP price held relatively firm for the month. Currency movements impacted the most, resulting in prices jumping around slightly through January. However, in the last week of the month, it would appear production signals placed some downward pressure on prices. Also impacting buyer’s strategy is the vast amount of stock in intervention, keeping deals short term.
It has been a quiet month for mild Cheddar, with buyers operating a “wait and see” approach. The average price in January stayed the same as December.
*cream and butter prices are compared on a fat basis on the assumption cream contains 40% butterfat and butter contains 82% butterfat
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 27 January. 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.