Dairy Roundup October 23, 2014 12:00 am Production Latest figures from the RPA show milk production continues to remain high. Deliveries for September stood at 1,141.6 million litres, 7.4% higher than last year. Cumulative production is now running at 8% more than 2013 at 7,397.7 million litres. The increase in production, not just domestic, but globally has, had an impact on prices which have been falling in the UK since April (see prices below) but this is not expected to have an impact on deliveries in the short term. Favourable weather conditions and good quality conserved forage is expected to keep yields ahead of year earlier levels. Deliveries will only see a drop if cow numbers fall, but the latest release from the RPA show the UK dairy herd expanding (See June Survey Article), no doubt on the back of the good prices and confidence seen in the industry a year earlier. But if prices keep falling this may reverse, but it is the nature of the industry that farmer’s are unable to react quickly to market signals. Further a field, global production is tightening; the Southern hemisphere is now close to its seasonal peak and EU production collectively is forecast to slow down at the beginning of 2015 as the threat of super levy grows for some of the countries. Prices Prices continue to be cut, the following have been announced as from 1st January: Tesco cheese suppliers will receive a 2.29ppl cut The Dairy Crest formula price reduces again by 0.843ppl, mainly due to a fall in cream prices Waitrose suppliers will receive a 0.8ppl milk price drop Arla direct suppliers will receive a 3ppl cut Meadow Foods suppliers will receive a milk price cut by 2.25ppl But is there a sign of the downward trend reversing? The latest Fonterra Global Dairy Trade (GDT) auction of 18th October recorded a 1.4% price increase in the overall auction index compared to two weeks ago. Both WMP and butter were up 3.1% and 3.9% respectively, although there were mixed results with SMP and cheddar down 3.6% and 1% respectively. This is the first overall index increase since June. Only if the next auction, to be held on 4th November, is also positive will we be able to tell if the downward trend really is reversing.
