Market factors still driving prices, despite falling pound

Published 7 September 17

Sterling fell further against the euro during August, as Brexit-related uncertainty hinders investment and economic growth. The pound has now remained below €1.09 for the past few weeks, the lowest value since 2009 and the global financial crisis. This means that sterling has lost over 20% of its value since pre-Brexit vote levels of €1.38. What effect has this had on our domestic dairy market?

Assuming that UK wholesale prices are fully impacted by movements in the exchange rate to the euro, the recent devaluation of sterling is supportive of UK prices. Between June and August this year, AMPE increased by around 9ppl, with exchange rates accounting for approximately 3.5ppl. Nonetheless, other factors, such as the global shortage of butter, continue to be more important drivers of price trends.

Exchange Rates