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2018 started sluggish for dairy prices

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Staff Writer | January 29, 2018
UK milk production normally increases through January. This year, milk production has been relatively stable, and this appears to have mitigated fears that we will be awash with milk, at least for now.
Milk prices
Dairy   Sterling strengthened against the Euro
2018 started sluggish for most with prices easing in the early stages of January. However, export enquires for butter and cheese, as well as domestic demand, helped support prices through the month. Little to no available spot stocks also provided some support, AHDB reported.

Sterling strengthened against the Euro, which did put a bit of pressure on those looking to export product to the EU. Most buyers continued with a short-term purchasing strategy although longer term enquiries appear to be happening. However, uncertainty over flush milk is a barrier for deals being done.

Cream prices dipped right at the start of Jan, following the holiday season, although not a great deal of trade was conducted. Prices firmed during the month as demand, or at least interest, picked up.

Prices ranged between £1,500 and £1,600 averaging in the middle. Cream generally traded lower than the butter equivalent suggesting more availability of cream than butter.

Butter prices shared the same January trend as cream, easing early in the month before increasing and firming for most of the month. While the future is a bit uncertain as we head towards the spring, what is clear is supply and demand is finely balanced at present.

SMP continued to fall through January, with currency being the main influencer. Sterling has strengthened against the Euro, although that was partly due to the Euro weakening against the US Dollar. This exaggerated the UK price, which meant prices had to fall to compete with the EU prices.

There seems to be a two-tiered level of need in the mild cheddar market. Those that need to buy and those that need to sell.

Prices ranged between £2,600 and £3,200 with those sitting on stocks may be looking to shift some product at a slight discount/competing with cheaper EU product.

However, if stocks are not an issue and buyers are looking for British product then a market premium was still achieved in January.