Future Milk Prices

UK farmgate milk prices are currently at record levels with high commodity prices due to tight supplies driving up prices.  The DEFRA July average farmgate price is expected to show a further substantial increase on the June figure.  Whether this upwards trend will continue remains to be seen.  We have already seen domestic deliveries are starting to overtake last year’s (see article ‘Production and Butterfat’) when the terrible weather affected output.  Global supplies in 2012 and early 2013 were also affected by drought in New Zealand and high feed costs in the US.

But looking forward, NZ is just entering its peak season and early reports suggest a good start to the season with pastures looking well and the milk price strong.  Over in the US, production will be driven by feed costs.  If the anticipated harvest comes to fruition, feed costs could ease improving the milk:feed price ratio.  Overall, from this autumn, global factors may well start to push the UK price downwards instead of driving it up, as has been the case over the last 12 months.