There have been some sporadic increases in retail milk prices in some parts of the world, but no significant moves. In the UK, it looks like retail giant Iceland has been the only one to push retail prices up yet (from £1.15 to £1.25 for four pints of milk I’m told).

In Australia just before Christmas, the big supermarkets Coles, Woolies and Aldi all increased retail price by 10c/litre. In the UK, some processors are very short on volumes and can’t meet contracts, so there is a real scarcity of fresh milk for coffee shops, etc.

One of the reasons why fresh milk volumes are so low in the UK is because alternatives (cheese, powders) are soaking up more of the fresh milk because they are making more money for the processor. To try to draw out the milk, the price to the UK farmers has increased substantially in the last week by 3p/l in some cases to between 40p and 45p/l.

The most recent global milk production figures show supply remains positive on a year-to-date basis, but supply fell for a third consecutive month, with output weaker in most major regions.

After increasing by 1.9% in the first half of 2021, it is likely that global supply will end the year up 0.8%.

European dairy commodities made further gains, with futures indicating markets will be supported at current levels into quarter two. New Zealand giant Fonterra also revised downward its annual supply forecast for current season this week from 1,525 m kg of milk solids to 1,500m kg of milk solids.