Milk costs have begun to stall because the market adjusts to elevated manufacturing and lowered wholesale demand.
Wholesale dairy values fell for the third consecutive time on the newest fortnightly Global Dairy Trade (GDT) on 1 November.
The GDT worth index was down by 3.9% total on the earlier occasion, with skimmed milk powder and complete milk powder down by 8.5% and three.4% respectively.
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The precise milk worth equal (Ampe) additionally dropped again to 51.3p/litre in October, down by 1.9p/litre on month-earlier ranges.
However, manufacturing has been growing, with GB day by day milk deliveries averaging 33.59m litres for the week ending 22 October primarily based on the seven-day rolling common. This was an uplift of two.9% on the identical week final yr and 0.5% up on the earlier week, based on AHDB figures.
Michael Masters, head of milk provide operations at Barbers Cheesemakers, stated: “Some areas of dairy demand have softened as the results of greater costs. Meanwhile, milk manufacturing ranges domestically and throughout the EU have strengthened in current weeks.”
“Going ahead into 2023, a lot will depend upon the crucial steadiness of provide and demand, and whether or not the present will increase in milk manufacturing persists.”
Nick Holt-Martyn, principal guide at The Dairy Group, stated costs had been most likely on the peak now and wholesale markets had undoubtedly began to fall.
UK home provide has additionally turned a nook publish drought, he stated.
Mr Holt-Martyn added that the northern hemisphere was producing extra milk than it had at this level a yr in the past, with manufacturing in Europe not falling and now standing nonetheless. In distinction, manufacturing is rising within the US, he stated.
Milk manufacturing in New Zealand remains to be reportedly behind and moist situations resulting from La Nina is limiting manufacturing within the southern hemisphere.
“This aspect of the curve is the simple bit as a result of producers are utilizing inputs they purchased beforehand. It is the opposite aspect of the mountain that’s going to be tough as a result of milk costs begin to ease, however [producers] have gotten inventory that was paid for on the peak,” stated Mr Holt-Martyn.
“Therefore, you’ve acquired embedded prices which you could’t get out of however you’ve acquired a softening milk worth. It’s actually the brand new yr when issues are going to get tighter.”
Milk worth strikes
Arla has set the tempo of the market with a 1.33p/litre worth rise for its farmgate milk worth from 1 November.
This will raise the standard worth to 52.24p/litre primarily based on an ordinary manufacturing litre of 4.2% butterfat and three.4% protein.
Dairy farmers supplying Muller who meet the situations for the Muller Advantage programme will proceed to obtain a milk worth of 48p/litre for the standard liquid litre of 4% butterfat and three.3% protein from 1 December.
Dairy processor Freshways will proceed to pay its suppliers 50p/litre for the standard liquid litre.
First Milk has introduced it’s going to maintain costs into December at 49.69p/litre for the standard manufacturing litre, together with the member premium.
Cheesemaker Barber’s is holding costs into December at 50.02p/litre primarily based on an ordinary manufacturing litre.
Advice for producers
“When shopping for feed, it most likely pays to do short-term contracts fairly than long-term contracts,” stated Mr Holt-Martyn.
“When you might be shopping for straights, it is best to look to your necessities and dip into the market to be sure you have gotten provide whenever you want it. But don’t commit your self too far ahead at costs that will develop into unstable.”
Mr Holt-Martyn stated high quality forage was additionally essential and it was essential to provide the absolute best high quality of forage, no matter yields.
Based on present farmgate milk costs and present feed costs there’s a cheap margin available, so it’s viable to feed cows effectively, based on Mr Holt-Martyn.