The current returns coming from dairy commodity markets mean September base prices of over 35p/l cannot be sustained this autumn, representatives from across the industry have said.

Market returns have collapsed on the back of strong milk supplies both domestically and internationally, which has led to a build-up of stocks. With excess supply, commodity buyers have stood back in the expectation of lower prices.

“Production has ramped up since August across Europe – no one could have predicted the massive jump in supply that has happened,” commented one source.

Writing to his suppliers, Leprino Foods CEO Paul Vernon noted that cheese prices were down £1,000/t in recent weeks and butter down £1,700/t, which has impacted returns for cream. He said he had no option but to start to reflect that in farmgate prices, with Leprino down 2.25p for September, taking its base to 35p/l.

“Given the current market returns we would anticipate further decreases in milk price in the coming months. Market returns today would indicate a milk price of circa 30p/l but I would caveat this by saying that markets have not yet shown any signs of bottoming out,” he said.

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