Global Milk Prices

Global dairy markets have remained firm over the last couple of months, although price moves have been limited.  The benchmark Fonterra auction index stood at $4,805 per tonne at the last sale on the 19^th November.  This is consistent with the range of $4,500-$5,000 per tonne which prices have been in since the spring.  It is well ahead of the levels seen a year ago when prices were around $3,300 per tonne.  Although production is increasing around the world (as reported in previous Bulletins), so far this is finding ready buyers and prices have not yet fallen.  Most analysts expect commodity dairy markets to weaken at some point in 2014 as production continues to ramp-up.  With demand remaining so strong (especially from China) the point when this occurs may be pushed back later in the year, and any fall less than once feared.  If this proves correct, it would obviously help support UK prices at their current record levels.