Prices freeze as production increases
- With UK farmgate milk prices on a high, milk production has shown a recovery during September and October 2022 (see chart).
- As dairy wholesale prices weaken (see article below), milk buyers may struggle to maintain farmgate milk prices at their current level.
- Most UK milk buyers have opted for a price hold for non-aligned contracts during December 2022.
AHDB milk production data shows that output for October 2022 is estimated at 1,222.98m litres (before butterfat adjustment) – an increase of 27.50m litres on a year-on-year basis. Cumulative UK production for the 2022/23 milk year to the end of October 2022 stands at 8,791.32m litres (before butterfat adjustment), which is 67.74m litres lower output compared with the same time last year. The UK average milk price for October 2022 is estimated at 50.44ppl. This represents a 1.64ppl increase from the previous month (48.80ppl) and a year-on-year increase of 17.78ppl from October 2021.
Farmgate prices: December 2022
The main price updates for December 2022 include:
- Arla Foods amba – After a late 1.5-euro cent increase to the November milk price, Arla has confirmed a hold on the November milk price going into December 2022. The liquid standard litre price for December holds at 50.24ppl. The manufacturing standard litre (4.2%BF & 3.40% protein) holds at 52.24ppl.
- Arla Foods organic – No change for December 2022. The organic manufacturing standard litre holds at 57.02ppl. The liquid standard litre price holds at 54.85ppl.
- Müller Direct – No change for December 2022 farmgate milk price. See Milk Price table, right.
- Müller organic – The Müller organic milk price will hold at 56.00ppl for December 2022.
- First Milk – FM will hold the November 2022 milk price for December 2022. See Milk Price table, below. FM has also confirmed a hold on prices from December 2022 into January 2023.
- Fresh Milk Company (Lactalis) – Following a late announcement at the end of October, the Lactalis milk price for November increased by 0.42ppl taking the manufacturing standard litre milk price up to 50.12ppl. The liquid standard litre milk price increased by 0.41ppl to 48.21ppl. Lactalis has confirmed a hold on November prices going into December 2022.
- Sainsburys (SDDG) – The retailer has confirmed a 0.50ppl increase for December 2022. The price for Müller members of SDDG increases to 47.50ppl for the liquid standard litre, whilst Arla members increase to 47.38ppl. Both prices incorporate a booster payment (currently 3.00ppl) which will continue up until spring 2023.
- Co-op – The Co-op farmgate milk price will increase by 0.16ppl for December 2022, on the back on the SDDG price increase, above (the Co-op price tracks Müller TSDG, SDDG and Müller Direct prices). The liquid standard litre price increases from 47.67ppl to 47.83ppl for December 2022.
Weak wholesale prices cause concern
During the first quarter of the year (Jan-Mar), world market dairy product prices were supported by tight supplies coupled with limited growth in global milk production. Since the end of the first quarter, the situation has changed. High product prices combined with rising inflation have impacted on consumer demand, leading to a softening in price levels for all dairy commodities. With product prices on a downward trajectory, some milk buyers may struggle to maintain current farmgate prices in the absence of improved returns from the market.
Dates for the Diary
- Semex Conference, 15th – 17th January 2023, Radisson Blu, 301 Argyle Street, Glasgow G2 8DL Details online here.
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