The Market Price Equivalent (MPE) has fallen to 24.3 ppl (35.1 c/l). This is the lowest it has been since May 2007.
Comparing May 2015 with May 2007, liquid returns are unchanged, with butter and cheddar higher, but commodities are well behind the returns of eight years ago. Commodities were less influential on domestic prices in 2007 compared to cheddar or liquid but now, party through the GDT, global prices and more importantly transparency in domestic returns, commodities are much more influential today.
The last eight years have seen a 7.6% increase in UK production. In 2014 alone there was a 667m litre increase in UK supply and 49% of that increase went into powders.
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Holland has increased by around 4% with Ireland and possibly Germany much the same or at least progressing in that direction. Much of that production will be going into powders, leaving markets weakened around the world. Until supply stabilises there can be little if any recovery in market returns without an unlikely significant shift in demand. Milk pricing for the rest of 2015 awaits the new season reports in New Zealand for any signs of reduced supply, combined with a response in the EU showing supply easing off through late summer and autumn.
The expectation for the new milk year remains flat overall but is being helped by good weather which is likely to help production through the summer. The 2015/16 milk price is forecast to average 25 ppl (36.12 c/l) to 26 ppl (37.56 c/l) for the year, which will put significant pressure on dairy profit margins.
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The Market Price Equivalent (MPE) has fallen to 24.3 ppl (35.1 c/l). This is the lowest it has been since May 2007.
Comparing May 2015 with May 2007, liquid returns are unchanged, with butter and cheddar higher, but commodities are well behind the returns of eight years ago. Commodities were less influential on domestic prices in 2007 compared to cheddar or liquid but now, party through the GDT, global prices and more importantly transparency in domestic returns, commodities are much more influential today.
The last eight years have seen a 7.6% increase in UK production. In 2014 alone there was a 667m litre increase in UK supply and 49% of that increase went into powders.
Holland has increased by around 4% with Ireland and possibly Germany much the same or at least progressing in that direction. Much of that production will be going into powders, leaving markets weakened around the world. Until supply stabilises there can be little if any recovery in market returns without an unlikely significant shift in demand. Milk pricing for the rest of 2015 awaits the new season reports in New Zealand for any signs of reduced supply, combined with a response in the EU showing supply easing off through late summer and autumn.
The expectation for the new milk year remains flat overall but is being helped by good weather which is likely to help production through the summer. The 2015/16 milk price is forecast to average 25 ppl (36.12 c/l) to 26 ppl (37.56 c/l) for the year, which will put significant pressure on dairy profit margins.
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