Archive: Processing capacity will be key to milk price movements in flush

Published 17 February 15

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Capacity for drying milk is expected to be tight for much of the spring flush, according to an informal survey carried out by AHDB/DairyCo. If capacity is reached over this period, spot prices for raw milk would be expected to fall, although only temporarily.

Milk production in GB has been high this year and is expected to remain so through the spring flush. This means that any mechanical breakdowns or shortages in haulage capacity could cause some short term issues in the supply chain as no new drying capacity has been added in the past year. In addition, the current high stock levels for cheese and limited chilled storage availability means the ability to convert milk into cheese may be restricted.

The main impact of depressed spot markets will be on prices paid to those farmers with no contract in place, or those supplying to buyers highly active in spot markets. The majority of farmers will be paid on contracts where the impact of peak milk is accounted for though mechanisms such as seasonality or balancing payments.

GB daily milk deliveries