MMN January 2025 – Milk Market Update

Dairy Commodity Markets

• Fonterra’s latest on-line GDT auction (7^th January) resulted in a 1.4% decrease in the weighted average price across all products, reaching US $4,029/t. This follows a 2.8% drop at the previous auction on 17^th Both butter and cheddar were up 2.6% and 1% respectively, while skim milk power and whole milk powder fell 2.2% and 2.1% respectively. Full results are available at:

https://www.globaldairytrade.info/en/product-results/

• The pressure on wholesale prices of fats has eased slightly, with average prices for bulk cream and butter down 1% and 2% respectively for December. The improved milk supply, both domestically and in the EU is impacting prices, although supplies of butter are still said to be tight. Prices for cream and butter were stronger in the first part of the reporting period (November) but both fell back throughout December, with sales of butter varying by as much as £1000/t over the month.

Commodity	Dec 2024 £/t	Nov 2024 £/t	% Difference Monthly	Dec 2023 £/t	% Difference 2024-2023
Butter Cream	3,016	3,059	-1	2,054	+47
Butter	6,470	6,630	-2	4,620	+36
SMP	2,100	2,100	0	2,230	-6
Milk Cheddar	4,080	4,190	-3	3,510	+16

Source: AHDB Dairy - based on trade agreed from w/b 18^th Nov - 22^nd Dec 2024. Note prices for butter, SMP and mild cheddar are indicative of values achieved over the reporting period for spot trade (excludes contracted prices and forward sales). Bulk cream price is a weighted average price based on agreed spot trade and volumes traded.

 

• There was no change in the average monthly SMP price, with sufficient stocks but rising demand for protein powder keeping prices firm.

 

• On average mild cheddar declined by £110/t from November. The market was reasonably quiet, with buyers unwilling to purchase too much product at high prices and sellers reluctant to drop their cheese price on the back of strong milk prices.

 

• Given the declining wholesale prices for dairy commodities, both market indicators AMPE and MCVE fell in December by 0.83ppl and 1.09ppl . The Milk Market Value has dropped for the second month in a row, back 1.04ppl for December to 44.6ppl and it was also down 0.74ppl in November to 45.64ppl.

	Dec 2024 ppl	Nov 2024 ppl	Dec 2023 ppl	Net amount less 2.4ppl average haulage - Dec 2024 ppl
AMPE	45.39	46.22	37.95	42.99
MCVE	44.40	45.49	36.54	42.0

Source: AHDB Dairy

 

• The Defra farm-gate milk price for October was 45.17ppl, which was 2ppl more than September’s price. Their November and December price will be released towards the end of January but forecasts from The Dairy Group indicate that the Defra farm-gate milk price will rise for November and December to 46.7ppl, before easing slightly for January to 46.3ppl.

 

GB Milk Deliveries and Global Production

• Daily deliveries for the w/e 28^th December were 34.06 million litres, which is 0.1% more than the previous week and 2.6% higher than the same week last year (an extra 860,000 litres/day). AHDB’s December forecast is for GB milk production to reach 12.43 billion litres for the 2024/25 milk year, which is 0.9% higher than the previous year. Strong milk prices on the back of a shortage of butter and cream and a more favourable milk price to feed price ratio has helped drive volumes in the second half of the year, along with more favourable grazing conditions in the autumn. Milk production for November was up nearly 4.5% on November 2023.

 

 

• Rabobank’s latest forecast is for global milk production to increase by 0.8% in 2025. Growth is expected in all seven main exporting regions (US, EU, Australia, New Zealand, Brazil, Argentina and Uruguay). The main driver for this is better margins with improved farm-gate milk prices and lower feed costs compared to 12 months ago. Chinese demand for exports is expected to increase by 2% in 2025. This is in response to a slowdown in their domestic milk production, estimated to fall 1.5% in 2025 on the back of falling milk prices and heat stress in quarter three last year leading to more farmers ceasing production.

Monthly Price Movements for January 2025

There was no change in milk price for the main Scottish milk buyers from December into January.

Commodity Produced	Company Contract	Price Change from Dec 2024	Standard Litre Price Jan 2025
Liquid & Cheese	Arla Farmers UK	No change	46.58ppl liquid 48.54ppl Manufacture
Cheese, Liquid & Brokered Milk	First Milk	No change	45.35ppl Manufacture
Cheese	Fresh Milk Company (Lactalis)	No change	44.72ppl Manufacture
Liquid & Manufacture	Grahams	No change	40.0ppl
Liquid & Manufacture	Müller Direct	No change	42.25ppl (includes 1ppldirect premium. Does not include haulage charge)
Liquid & Manufacture	Müller (Co-op)	No change	41.13ppl
Liquid & Manufacture	Müller (Tesco)	No change	40.44ppl

 

Other News

• Amazon founder Jeff Bezos is to award a £7.3 million grant to the Pirbright Institute and Royal Veterinary College to help develop a potential vaccine that could reduce methane emissions from livestock by more than 30%. The project aims to try and identify the mechanism that could be used for a potential vaccine by investigating the development and colonisation of the methanogen microbes in the digestive tract of calves and what antibodies are required to effectively target these microbes to reduce their methane producing ability. The Bezos Earth Fund, set up in 2020, has also supported other projects to reduce emissions on farms through low-methane genetics, feed and improved farm management practices.

 

• Denmark has announced plans to introduce a tax on greenhouse gas emissions from livestock from 2030. It has also pledged to reduce nitrogen emissions from 2027 by 13,780 tonnes/year. The measures to be put in place include a €16 payment per tonne of CO₂ and methane emitted from 2030, and that tax will rise to €40 per tonne in 2035. For both dairy and beef farmers, it is predicted that the tax will work out at around €130/cow/year and in time, the consequences of these regulations is that livestock businesses will increase in size and become more intensive.

 

• The UDSA’s veterinary services had confirmed the presence of bird flu (H5N1) in 266 dairy farms in California in the last 30 days (as of mid-December). The Centre for Disease Control states that the risk to humans is low and that symptoms of the disease are similar to mild flu. While the disease is not fatal in dairy cows, it does reduce milk production.

 

• Did you know that India has the largest herd of milking cows in the world (including cows and water buffalo) and is the largest milk producer? In 2025 the national herd is expected to reach 62 million head of cattle, which is 0.8% up on 2024 numbers. Their milk production is forecast to increase to 26.5mmt in 2025, with more milk being marketed, as well as increases in butter and skim milk powder production. Some of their liquid milk is exported to Bhutan, Singapore and UAE, and their butter exports are increasing to the Middle East. The growth in milk production is due to more disposable income in a country where the population is still growing, along with government grants to support the industry and high milk prices.

 

lorna.macpherson@sac.co.uk; 07760 990901