Dairy Update September 26, 2014 12:00 am Prices This month has seen another round of farmgate price cuts. Among the more notable are; the Tesco direct price will be 32.01ppl for the six months from 1st November Sainsbury’s direct price will fall by 0.62ppl from the 1st October. This takes it down to 3.2.3 to 3.2.4ppl, depending on which processor the farmer is with Arla co-op price to drop a further 1.67ppl to 28.55ppl from the 29th September Muller Wiseman formula contract drops 2.27ppl to 29.14ppl from 1st October the Dairy Crest formula price reduces by 0.5ppl to 31.43ppl, also from the 1st October a 1.9ppl fall for Meadow Food suppliers from the start of October, bring their price to 28.1ppl It can clearly be seen that the formula prices based on cost of production or other indicators are providing some protection for farmers in the falling market we currently have. Those contracts more closely linked to commodity markets (Arla and First Milk) are dropping faster. At the global level the Fonterrra (GDT) auction at least halted its slide at its last round on the 19th September. The average of all prices was unchanged on a fortnight earlier (the first time this has ever happened). The first auction of the month was 6% down on the previous one however. Production Output is still roaring away, both in the UK and further afield. Latest statistics from the RPA show that production for August, at 1,192.9m litres, was 6.9% higher than the same month last year. It was also 6.8% higher than the five year average. Cumulative production now stands at 8.4% higher year-on-year (partly explaining the fall in prices). It is 6.1% above the 5-year average. All this has caused a resurgence in interest in milk quota in its final year. However, it should be noted that, despite the higher output, the UK has been below quota, after the butterfat adjustment, in all of the last four months. It still seems highly unlikely that quota will be reached this year. In the EU as a whole, production is up 5% for the first half of 2014. New Zealand has increased its output by a whopping 16% over the same period.
