The milk price indicator (MPI) published by the Ulster Farmers’ Union (UFU), remains a good indicator of the movement in base milk prices, the latest analysis shows.
Last June, the MPI peaked at 48.88p/l, but has since slipped to 31.95p/l, its lowest level for 21 months.
During the same period, average base price for milk rose from 43p/l to a peak of 49p/l, before falling back to 31p/l last month.
Market trends
The MPI converts commodity prices back to farmgate level with a projected base milk price. However, there are two caveats to keep in mind. Firstly, as dairy commodities normally operate on forward-buying contracts, the MPI predicts the direction milk prices will move during the subsequent six to eight-month period.
Secondly, it does not include transport costs or a margin at processing level. While these costs can fluctuate between processors, it is reasonable to deduct between 3p to 5p/l to get an on-farm price.
Tracking base price
As highlighted in the graph above, the MPI has accurately forecasted the recent movement of milk prices. The surge in market returns during the spring and summer of 2022 materialised into higher farmgate prices during summer and autumn. Since then, the MPI has been on a lengthy downward trajectory.
Outlook
Looking forward, with the latest MPI standing at 31.95p/l, it points to autumn base milk prices dropping back to around 28p/l.
Read more
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British farmers to need photo ID to buy fertiliser
The milk price indicator (MPI) published by the Ulster Farmers’ Union (UFU), remains a good indicator of the movement in base milk prices, the latest analysis shows.
Last June, the MPI peaked at 48.88p/l, but has since slipped to 31.95p/l, its lowest level for 21 months.
During the same period, average base price for milk rose from 43p/l to a peak of 49p/l, before falling back to 31p/l last month.
Market trends
The MPI converts commodity prices back to farmgate level with a projected base milk price. However, there are two caveats to keep in mind. Firstly, as dairy commodities normally operate on forward-buying contracts, the MPI predicts the direction milk prices will move during the subsequent six to eight-month period.
Secondly, it does not include transport costs or a margin at processing level. While these costs can fluctuate between processors, it is reasonable to deduct between 3p to 5p/l to get an on-farm price.
Tracking base price
As highlighted in the graph above, the MPI has accurately forecasted the recent movement of milk prices. The surge in market returns during the spring and summer of 2022 materialised into higher farmgate prices during summer and autumn. Since then, the MPI has been on a lengthy downward trajectory.
Outlook
Looking forward, with the latest MPI standing at 31.95p/l, it points to autumn base milk prices dropping back to around 28p/l.
Read more
Caution required for rehousing animals
British farmers to need photo ID to buy fertiliser
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