Agribusiness News June 2024 – Milk

GB milk production data

The peak production time has now passed, with a daily high of 37.33mlitres (for GB) on the 12^th of May. This compares to a high of 37.57mlitres on 5^th of May 2023. The latest GB monthly milk production data from AHDB is estimated at 1,075mlitres for April, 0.9% down on the March volume. Daily deliveries were 36.57mlitres for the w/e 18^th May, just 0.2% below the previous week and 0.5% down on the same week in 2023. The UK milk volume for April was 1,318mlitres, 0.7% less than March and 1.1% less than April 2023.

Farm-gate prices

The Defra average farm-gate milk price for April was 37.21ppl, 0.21ppl down on the March price. The most up to date milk prices from the main Scottish milk buyers available at the time of writing are shown below.

	Milk Prices for May/June 2024 Scotland			Standard Ltr ppl
	First Milk2			May	39.5
	Müller - Müller Direct - Scotland 1, 3			Jun	38
	Grahams1			May	36
	Arla Farmers2			May	40.45
	Lactalis / Fresh Milk Co.2			May	38.5
	Yew Tree (A volume litres)1			May	37
	1		Liquid standard litre – annual av. milk price based on supplying 1m litres at 4.0% butterfat, 3.3% protein, bactoscan = 30, SCC = 200 unless stated otherwise.
	2		Manufacturing standard litre - annual av. milk price based on supplying 1m litres at 4.2% butterfat, 3.4% protein, bactoscan = 30, SCC = 200 unless stated otherwise.
	3		Includes 1.00ppl Müller Direct Premium. Haulage deducted depending on band for 2023 vs 2021 litres, ranging from -0.25 to -0.85ppl.

Dairy commodities & market indicators

The latest UK wholesale dairy commodity prices were all up from the previous month. The lower-than-expected milk volumes at this time of year and concerns about future stocks stimulated more buying activity.

Sentiment is more positive now, highlighted by the latest Global Dairy Trade (GDT) auction returning its 4^th increase in a row, with the average price across all products sold reaching US $3,861/t. For the first time in four months, the Milk Market Value indicator increased, up 0.86ppl to 36.54ppl for May.

UK dairy commodity prices (£/tonne)	May	Apr	Nov
	2024	2024	2023
Butter	5,080	4,910	4,580
Skim Milk Powder (SMP)	2,010	2,000	2,280
Bulk Cream	2,104	2,037	1,985
Mild Cheddar	3,540	3,470	3,400
UK milk price equivalents (ppl)	May	Apr	Nov
	2024	2024	2023
AMPE	37.08	36.14	37.67

© AHDB [2024].  All rights reserved.

 

Grass growth and mineral warning

Grass growth rates have rocketed, now exceeding those at this time last year, and are also higher than the 5-year average (GrassCheck GB). The current daily grass growth rate on dairy farms was 91.7kg DM/ha for the w/b 20^th of May. Across Scottish dairy, beef and sheep farms, daily grass growth was 79kg DM/ha. Nutritional quality is good, with crude protein content at 18.1% and ME at 11.1MJ/kg DM. With favourable weather for rapid growth, the challenge is maintaining grass quality for the next grazing round and mowing.  Topping swards may be necessary to achieve the desired residual. For a 650kg cow, current grass quality should support M+19 litres (based on 16kg grass dry matter intake).

Given the wet winter and spring, mineral levels in grass and silage may be lower this year, leading to increased risk of deficiency. Grassland that has been underwater has lower oxygen levels and therefore reduced mineral uptake from the soil. Levels of antagonists such as iron and molybdenum may also be higher, reducing absorption of essential trace elements in the gut (particularly copper). Therefore, it is worth getting fresh grass and silage made this summer analysed for minerals to ensure that current supplementation is meeting requirements. If in doubt speak to your nutritionist about a mineral audit, and blood testing can also be useful to confirm any deficiencies in livestock.

Global Outlook

Farm-gate milk prices are likely to be slower to recover than previously thought, according to a recent report by Rabobank. Chinese net dairy imports are expected to fall by 8% in 2024 (mainly from declines in SMP), and with their growing domestic production combined with weaker global demand, global milk price recovery has slowed. High interest rates and inflation continue to be above target in many countries, putting pressure on consumer spending. However, exports of butter and cheese are faring much better than SMP and current levels of demand are expected to be maintained. With prices for straights such as soya and maize looking to remain stable or even fall in the second half of 2024, margins over purchased feeds should improve from where they were six months ago.

Lorna MacPherson, lorna.macpherson@sac.co.uk