Farming News - AHDB May dairy market review
AHDB May dairy market review
GB milk deliveries remained subdued through April despite good grass growth and strong prices. For the month as a whole, GB deliveries totalled 1,084m litres, 34.4m litres lower (3.1%) than in 2021. This trend has continued into May, with deliveries in the first 3 weeks running 2.7% behind previous year volumes.
The peak was reached on 6 May with a daily figure of 37.0m litres, 2.5% lower than the highest individual day in 2021, and the lowest ‘peak day’ since 2016.
At the same time, global milk deliveries remain down year on year, with all of the key producing regions recording lower deliveries for March, with the exception of Argentina. In total, March deliveries were estimated to be 0.7% lower than last year. High input costs continue to challenge farm budgets, and despite rising milk prices, production remains down year on year.
The steady climb in dairy wholesale prices was dampened through May as production hit the spring peak. With processing capacity stretched, and buyers stepping back from the market in hopes of lower pricing, most dairy products saw prices weaken in May. Cheddar was the exception to this, as tight availability continued to push up prices.
AMPE fell 2% in May as the value of SMP fell and butter values remained unchanged on average. On the other hand, MCVE rose further to just over 53ppl, in line with higher Cheddar prices. On balance, this has seen the average milk market value (MMV) increase by another 0.7ppl.
Farmgate prices and input costs
Farmgate prices in GB have seen significant increases so far through 2022. The GB average price in March for all milk was 36.17ppl, although recent price increases will boost this average to around 42ppl-43ppl depending on the milk buyer. Despite the significant increases in milk prices since January, there has been no noticeable increase in milk production.
There has been no respite in the cost of inputs, a situation which is likely to remain while the war in Ukraine continues. High gas prices continue to feed through into fertiliser prices, although some stability was seen in domestic pricing in April. Availability is said to remain an issue.
Feed prices also remain high in historic terms, with little hope of a change in direction given the outlook on markets for feed ingredients. While there has been good grass growth this spring, it remains to be seen how much this will help offset the cost of bought-in feed later in the year.