Sentiment currently biggest driver of wholesale markets

Published 27 October 17

How much can sentiment drive a market? A lot it seems. Without a great deal of change in market dynamics, we have seen wholesale prices fall sharply.

Yes milk production is looking better, however, comparing it to last years’ figures does not paint the full picture. The EU’s milk reduction scheme was beginning last year and the UK are still 0.5-1.5m litres/day lower than production levels seen in 2014/15 and 2015/16.

Apart from SMP, stocks levels remain relatively stable, so there does not seem to be a great deal of change in availability. However, sentiment has been driving a shift in demand. Buyers seeing milk production up 2-3% seems to have triggered the strategy of “wait and see” in case prices fall further, resulting in even more short-term focus of buying.

As well as keeping milk production in context, it is also important to remember that, with the exception of SMP,  while prices have fallen significantly, in relation to previous years, they are still at historically high levels.

More on October’s wholesale market can be found here.

UK Wholesale Graph