Monthly Commentary on Milk Price Changes

Published 4 April 18

April saw a mixed bag of falling and increasing milk prices. A couple of aligned contracts saw increases, as did Arla members (due to the currency smoothing mechanism) while other processors announced decreases, probably catching up with market movements earlier in the year.

As well as the price movements, there have been a couple of other alterations made. From 1 April, First Milk will have just two payments schedules – Liquid and Manufacturing – getting rid of the seven contract regional approach it adopted in June 2015.

Muller too have announced some changes by introducing some retail supplements. Producers will receive around 0.15ppl in April and approx. 0.2ppl in May. However, the German owned processor will also introduce a 0.5ppl decrease to May milk.

Additionally to this, some others have followed suit to the May cut, however, this may be a result of giving 30 days’ notice and other circumstances that might have been implicated in April. At the same time, Dairy Crest Direct have announced a non-agreement with Dairy Crest on the price for May, meaning DCD members can now give reduced notice should they desire to leave.

It is a very cagy period for wholesale markets at present. Prices in March largely saw some stability, despite weather impacts, with both sides of the trading fence seeming reluctant to commit to deals long term. Some buyers reckon prices could fall further as we approach Northern Hemisphere peak milk production. However, those who might be looking for longer-term deals are being met by sellers not laden with stocks and therefore, not prepared to promise volumes.

As always, the run up to spring peak is bringing an increased level of uncertainty in the market. No one seems to agree on what the next month or two will bring. However, markets often become clearer after peak, and that will hopefully bring some much-needed stability into the market for a short period.