Dairy Update

GB milk production for April 2023 to January 2024 totals 11.23 billion litres; just 0.6% less than in 2022-23.  However, deliveries are estimated to have totaled 973 million litres in February (29 days) this would be a 1.1% decline year-on-year.  The full year 2023-24 could record the lowest milk production since the 2016/17 milk season.  Furthermore, with BCMS data showing only marginal change in the GB herd, the decline in deliveries is being driven by a reduction in yields.  Over the past year, lower milk prices and high costs means there has been little incentive to push cows.  Currently, the very wet weather means turn-out has been delayed affecting production going into the spring.

Global deliveries were also down during the latest recorded month (December).  During that period, daily production was -0.4% lower (3.4 million litres per day) across the main producing regions of Argentina, Australia, the EU, New Zealand, the UK and the United States.  EU deliveries in December were marginally behind last year by -0.3%, mostly driven by a significant year-on-year production decline in Ireland, down by 27% (76.6 million litres).  Looking ahead, latest forecasts show a modest 0.25% increase in global production in 2024.  Growth is expected in Australia, the EU and US but declines in the UK, Argentina and New Zealand.

In terms of trade, demand from China is often the key driver but this has been weak over the last year.  Imports of dairy products to China were down by 12% (2.6 million tonnes) in 2023 compared with year earlier levels, with WMP volumes declining by 38% on the year.  In contrast, SMP imports were up on the year, although only by 6%.

Prices

The UK wholesale market appears to be waiting for the spring flush.  Reports suggest it is fairly quiet and prices are showing a lack of market direction.  The GDT average index has declined at both events held in March by -2.3% and -2.8% to average $3,497.  These are the first falls since the beginning of November 2023.  Closer to home, UK farmgate prices continue their ‘steady’ upward trend.  March only really saw an increase by Arla, whose 0.88ppl took its conventional milk price to over 40ppl, the highest since April 2023.  Milk price updates for April include;

  • South Caernarfon Creamery (SCC) has announced an increase of 0.75ppl, taking its milk price to 37.0ppl for its manufacturing litre.  However, it has cut the annual bonus from 0.40ppl to 0.25ppl for the year to March 2025.
  • Muller UK is increasing its price by 1ppl for farmers who meet conditions of the Muller Advantage Sustainability Programme.  This takes the standard milk price to 37.5ppl, including the 1ppl Advantage Premium.
  • Belton Farms has also announced a 1ppl increase, this takes its standard manufacturing litre to 37.3ppl.
  • Both Wyke Farms and Barbers have announced increases of 0.7ppl and 0.52ppl respectively.
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