Business and Policy July 2025 – Milk
30 June 2025Milk production data
The spring flush has now well and truly passed, with peak production occurring on the 4th of May and reaching a record breaking high of 39.02 million litres per day. The latest data from AHDB estimates the GB milk volume for May at 1,186 million litres, 58 million litres more than the previous May, up 5.2%. Daily production is currently 37.38 million litres for the week ending 14th of June 2025, 0.7% less than the previous week but 6.7% above the same week last year. For the UK, May production was 1,458 million litres, which is 62.1 million litres (+4.5%) more than the previous month and 5.7% more than May 2024.
Farm-gate prices
The Defra farm-gate milk price for May was 43.12ppl, down 0.57ppl from the previous month and 13% higher than 12 months ago. While milk volumes will now be declining until the trough in September – before they pick up again with Autumn calvers; it is unlikely that we will see an increase in the milk price over the coming months.
Milk Prices for June/July 2025 Scotland* Standard Ltr ppl
First Milk2 Jul 44.85
Müller - Müller Direct - Scotland 1, 3 Jun 42.25
Grahams1 Jun 40.00
Arla Farmers2 Jul 47.87
Lactalis / Fresh Milk Co.2 Jun 42.13
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.
* Prices quoted are Standard litres but on-farm received price can vary significantly depending on individual contracts, bonuses and penalties applied.
Dairy commodities & market indicators
Despite continued improvement in domestic milk volumes, bulk cream and butter markets remained strong throughout June, linked to weaker supplies in Europe and the strong domestic demand for cream. Interestingly, the drive in demand for cream is being linked, in part, to warmer weather and a bumper strawberry crop (AHDB, 25 June 25), with bulk cream prices rising from £2.50 per kg at the end of May to nearly £2.80 per kg in late June. On the back of more cream being sold than processed, butter gained ~ £100 per tonne month-on-month linked to tight supplies.
For June, average UK wholesale prices saw a significant rise in bulk cream (+5%) following a 3% decline in May. After no price change in May, butter prices rose by 2% in June, with skimmed milk prices (SMP) rising by 1%. Bucking the price trend for June was mild cheddar which saw a price fall of 1% against the May price. However, with buyers keener to commit and a better balance of stock post-spring flush, demand for mild cheddar has been improving. As a result, the June 2025 AMPE rose by 1% which equates to 0.14ppl against a 1% fall in the MCVE equivalent to 0.54 ppl.
The Milk Market Value indicator dropped 0.32 ppl to 42.45 ppl for June. The latest GDT auction on 17th June 2025 resulted in a 1% decline in the average price across all products reaching $4,389 per tonne. The previous two auctions also returned a negative movement in the average price. However, butter and cheddar bucked the downward trend at the most recent auction, with butter increasing 1.4% to $7,890 per tonne and cheddar up 5.1% to $4,992 per tonne.
| UK dairy commodity prices (£/tonne) | Jun 2025 | May 2025 | Dec 2024 |
|---|---|---|---|
| Butter | 6,160 | 6,060 | 6,470 |
| Skim Milk Powder (SMP) | 1,980 | 1,970 | 2,100 |
| Bulk Cream | 2,657 | 2,538 | 3,016 |
| Mild Cheddar | 3,900 | 3,950 | 4,080 |
| UK milk price equivalents (ppl) | Jun 2025 | May 2025 | Dec 2024 |
|---|---|---|---|
| AMPE | 42.64 | 42.05 | 45.39 |
| MCVE | 42.41 | 42.95 | 44.40 |
© AHDB [2025]. All rights reserved.
Global demand for butter
Demand for butter has been rising over the last decade, both here in the UK and abroad. There has been a consumer shift away from processed foods to more natural products without artificial ingredients and there has also been a trend towards favouring natural fats, which are thought to be beneficial to health (in moderation). With this increasing demand for butter, and global milk supply stable, global butter stocks remain tight.
The EU is the largest butter producer, but with EU cheese exports also increasing significantly in recent years and more profitability in cheese production compared to butter, combined with little growth in milk volume in 2024; there has been less milk fat available for butter production. This has helped keep our butter wholesale price and farm-gate milk prices firm despite higher milk volumes. As a result, both Rabobank and Fonterra expect global milk prices to remain strong over the next 12 months.
Falling producer numbers but production rising
Linked to AHDB’s last survey of UK milk buyers, it is estimated that ~190 dairy producers (-2.6%) have left the industry in the year to April 2025, with an estimated 160 producers having left the industry since October last year. While many producers choose to leave the sector prior to the start of the winter housing period, for some the changes to UK government support and the additional supply chain requirements will have also been a deciding factor.
While producer numbers are continuing to decline, the average milk volume per farm in Great Britain has now risen to an estimated 1.77 million litres per farm for the production year 1 April 2024 to 31 March 2025, up 4% on the previous production year. This is due in part to an increase in the average herd size from 156 in 2022 to 165 in 2024 (Defra June Census). On this basis, AHDB’s latest forecast for the 2025/26 milk year is set to reach a new high of 12.83bn litres, 3.1% more than the previous milk year.
Heat stress research
A Digital Dairy Chain funded project in collaboration with Galebreaker, Smartbell and SRUC are investigating the impacts of heat stress in dairy herds across Scotland and the North of England. Over 20 dairy farms stretching from Cumbria to Orkney are taking part, with a temperature and humidity sensor installed in the housing shed to monitor periods of risk and the impacts on milk production, health and fertility.
As part of the project, the researchers are looking for dairy farmers to share their perceptions and current practices dealing with heat stress through an online survey. If you could please spare a few minutes to provide your thoughts and experiences on heat stress in your dairy herd, it would be much appreciated!
Lorna MacPherson, lorna.macpherson@sac.co.uk
Sign up to the FAS newsletter
Receive updates on news, events and publications from Scotland’s Farm Advisory Service