Dairy Roundup June 27, 2014 12:00 am UK Milk Prices Arla has announced that the price paid to its members will fall by 1.23ppl as from 7th July. This would appear to be another step on the current downwards spiral of milk prices – especially as Arla has set the pace in UK milk pricing over the last few months. However, there have been few other major price cuts and Dairy Crest has already stated that it will hold its main Davidstow cheese and liquid prices for August. It must be remembered that the Arla price is a ‘European’ one, and the reason given for the cut is the challenging global market conditions over recent months. With markets possibly stabilising (see below), and spot UK milk prices reasonably strong, there is no reason why other processors necessarily have to follow Arla’s lead. Global Markets For the first time in four months the Fonterra auction (more correctly the Global Dairy Trade – GDT auction) showed an increase. The auction event on the 17th June saw the weighted average of prices increase by, an admittedly small, 0.9%. However, this perhaps suggests that supply and demand are getting back into balance. Although global output is still high, lower prices seem to be tempting buyers back into the market. UK Production May production figures show that UK output was up 8% compared to the same month last year. However, May last year saw production depressed; if this May’s figures are compared to the 5-year average the increase is a slightly less startling 5.5%. Whilst UK production is still high, it is believed that we are now past the spring peak (which arrived earlier than in previous years). We are now moving into the months where production started to take-off in 2013. Therefore we would expect the year-earlier comparisons to start showing much lower percentage increases.
