UK Milk Prices Continue to Rise Amid Tight Supply and Strong Demand

Muller also raised its price by 1ppl, bringing it to 41.25ppl for members of its Advantage programme. Despite these increases, prices remain 7.5ppl lower than at the start of 2023. Meanwhile, Arla raised its UK manufacturing price to 43.33ppl for conventional milk and 54.2ppl for organic, noting strong commodity markets, particularly for butter and fats, as EU supply tightens.

Cheesemaker Barbers increased its October milk price by 0.62ppl to 43.03ppl, citing rising wholesale cheese prices but warning of potential pressure on prices if consumers reduce purchases in response to higher costs.

Commodity Market Trends

The commodity market saw notable increases, with UK wholesale butter and whole cream prices jumping by 7% in the four weeks to August 18, reaching £5,860/tonne and £2,528/tonne respectively. Butter prices are now two-thirds higher than a year ago, and mild cheddar prices rose by 16% year-on-year. Skimmed milk powder prices were also up 9% from last year.

AHDB lead dairy analyst Susie Stannard pointed to tight cream availability as a key factor driving butter prices higher. Despite the rise in wholesale prices, retail butter prices fell by 2.4%, while overall retail sales of dairy products declined 0.2% by volume but increased by 1.8% in value.

Supply Pressures and Global Market Impact

Supply remains under pressure, with GB milk deliveries between April and August down 0.9% compared to the same period last year. Global dairy prices have also risen due to tight supplies, with the second Global Dairy Trade auction in August showing a 5.5% price increase.

In the EU, butter prices rose 3.9% in the four weeks to August 25, while milk powder prices also increased. However, cheddar cheese prices saw a slight decline of 0.1%. Despite these fluctuations, the overall market outlook suggests continued price strength amid ongoing supply constraints.