This season\u2019s\u00a0spring flush<\/strong><\/a>\u00a0has been supported by favourable weather and dairy economics, reaching a peak of 39.01 million (m) litres on 4 May<\/a>, the highest volume on record.<\/p>\n Following\u00a0a wet year, the\u00a0Met Office<\/strong><\/a>\u00a0reported below average rainfall throughout spring. Some rain at the back end of May helped the situation and grass growth has picked up<\/a>\u00a0but the June heat wave will not have helped\u00a0matters, which could limit forage stocks for later in the year.<\/p>\n The\u00a0milk to feed price ratio<\/strong><\/a>\u00a0remains firmly in the expansion zone and\u00a0milk price announcements<\/strong><\/a>\u00a0for June have remained fairly stable, despite high milk volumes. Meanwhile, lower milk volumes on the continent in spring and low\u00a0stocks of butter continue to support\u00a0commodity prices<\/strong><\/a>.<\/p>\n Organic milk production has been in strong recovery this year, recovering to 2023\/24 levels. This is in response to better weather and milk prices and recovering consumer demand.\u00a0We have taken a look at the organic dairy market here.<\/a><\/p>\n AHDB have adjusted the milk production forecast for the 2025\/26 milk year<\/a> to record a new high at 12.83bn litres, 3.1% more than the previous milk year, according to our June forecast update. This is an upwards revision from the previous forecast by 1% due to economic and weather-related factors.\u00a0<\/p>\n Strong growth in production is despite low cow numbers. As of 1 April 2025, the latest BCMS data shows that the GB milking herd stood at 1.62 million head, a decline of 0.9% year-on-year. This is the lowest April figure recorded.<\/p>\n Youngstock numbers (under two years of age), continued to decline for the ninth quarter. This was the largest category drop, down by 19,000 head from a year ago. The 2\u20134 years age category showed a similar decline of 16,000 head. This low supply of youngstock raises concerns about sourcing heifer replacements at accessible prices.\u00a0Bluetongue<\/strong><\/a>\u00a0spread and increased use of beef semen could impact herd size over the coming years.<\/p>\n A growth in autumn block calving will have intensified the trend towards higher production in the autumn.\u00a0According to analysis by AHDB utilising BCMS data<\/a>, the share of GB farms in 2024 running any type of block calving system has risen to 19.6%, while the number of farms running an all year round (AYR)* system remained fairly steady at around 35%. Autumn* block calving moved up 1.8 percentage points from 2021 to 7.2% of total farm numbers in 2024. This movement has exaggerated the peaks and troughs in the seasonal birthing profile of the GB dairy herd.<\/p>\n Global<\/p>\n The latest global production data<\/a> tells a different story. Accounting for the leap year in 2024, milk deliveries are picking up slightly year-on-year, tipping into growth after a flat month. The EU saw a decline of 0.4%, which is an improvement from the 2.3% losses seen last month. Reports are that BTV is now beginning to slow down on the continent with fewer cases reported. Ireland and Poland continue to grow strongly. US production saw growth of 0.9% with Australia flat<\/a> and New Zealand up 2.0mn litres per day. Argentina\u2019s production has been recovering strongly (+15.9%) compared to the weakness seen in 2024.<\/p>\n Rabobank expect the key exporting regions to see modest growth in production in 2025<\/a> driven by growth in the EU and US. However, the EU was expected to grow by 0.5%, which could already be at risk given the impact of BTV seen so far. Rabobank are expecting 1.0% growth in 2025 and only 0.3% in 2026 with some headwinds emerging from a downturn in global demand and some trade disruption factors including tariffs.\u00a0<\/p>\n \u00a0\u00a0<\/p>\n \u00a0 Wholesale markets: May<\/p>\n Overall, the market was noted to be reasonably stable<\/a> with some downward pressure in spite of soaring milk volumes. Most commentators noted that product demand had seen little change month on month as peak milk production was reached.<\/p>\n Bulk cream<\/strong>\u00a0prices took the largest hit month on month, with the average price down \u00a387\/t in May. Weekly movements were reported as consistently lower as soaring milk production has led to an abundance of cream availability. Alongside this, it was said that demand has been patchy as processing capacity struggled to keep up with volumes.<\/p>\n Average\u00a0butter\u00a0<\/strong>prices continued to hold firm, making a marginal gain of \u00a310\/t month-on-month with the range in prices tightening significantly during this reporting period. Despite the strength recorded in milk volumes, butter stocks remain tight with demand generally reported as stable month on month. It was noted that the closure of a large facility for maintenance put additional pressure on processing capacity.<\/p>\n SMP<\/strong>\u00a0continued to ease, with the average price edging down \u00a310\/t on average in May. As with butter, the range in prices was very narrow with a little weekly fluctuation driven by demand. Overall, the market was said to have seen little change month-on-month.<\/p>\n Mild cheddar<\/strong>\u00a0markets this month came under pressure at the end of reporting period, driving the average price lower month on month by \u00a370\/t. Availability was reported as good and comfortable while was demand still subdued but steady. However, it was noted that many traders are watching European milk production closely as continental cheese supply is tight.<\/p>\n \u00a0<\/p>\n \u00a0\u00a0\u00a0 \u00a0<\/p>\n \u00a0<\/p>\n Farmgate milk prices\u00a0<\/p>\n The Fair Dealing Obligations Milk (FDOM) regulations<\/a> will come into force on 9\u00a0July and all milk contracts must be compliant by this date. The\u00a0Agriculture Supply Chain Adjudicator (ASCA)<\/strong><\/a>\u00a0are the body which has been set up to police the new milk purchase contract rules and have set up a mailbox to raise concerns about milk contracts.<\/p>\n Contact ASCA:\u00a0asca@defra.gov.uk<\/strong><\/a><\/p>\n \u00a0<\/p>\n The\u00a0latest published farmgate price<\/strong><\/a>\u00a0was for April with a UK average milk price announced by Defra as being 43.69, down 1.18 pence (2.6%) on the previous month.\u00a0<\/p>\n Latest announced\u00a0farmgate prices<\/strong><\/a>\u00a0were fairly steady for June.<\/p>\n On\u00a0retail aligned liquid contracts<\/strong>, most buyers on the AHDB league table held their prices from the previous month. The exception to this was Sainsbury\u2019s, which made a positive price announcement of 0.06ppl.<\/p>\n Looking to\u00a0non-aligned liquid contracts<\/strong>, most buyers held steady for the month after having seen some cooling off the previous month. Crediton Dairy held steady for the fifth consecutive month. Freshways and Payne\u2019s Dairies held on to their price after a decline of 2.0ppl each the previous month. Muller\u2019s price has been stable since December. Pembrokeshire Creamery was the only one in the category to reduce their price by 0.12ppl.<\/p>\n Cheese contracts<\/strong>\u00a0were steady except for two buyers on the\u00a0AHDB League table<\/strong><\/a>. First Milk Manufacturing and Belton Cheese lowered their price by 0.50ppl and 1.00ppl respectively. Apart from those, Barbers have been stable since April and Saputo held their price for the eighth consecutive month. Leprino, Lactalis, South Caernarfon Creameries and Wyke Farms also made no changes for another consecutive month.<\/p>\n Manufacturing contracts<\/strong>\u00a0were also stable. Meadow held on to their price for the second consecutive month. Pattemores Dairy have made no changes to their price since last seven months. UK Arla Farmers Manufacturing remained steady for the month.<\/p>\n \u00a0\u00a0\u00a0<\/p>\n \u00a0 \u00a0<\/p>\n Trade<\/p>\n Total export volumes of dairy products from the UK for Q1 2025 are down year-on-year. However, they are higher compared to the last two quarters. Exports of dairy products to the EU declined by 24,000 t whilst increasing by 7,200 t to non-EU nations.<\/p>\n This was largely driven by a decline in exports of milk and cream which fell by 24,300 t (10.9%). There was also a decline in exports of cheese and curd of 3,300 t (6.4%) and a marginal decline of yoghurt exports by 400 t (3.9%).<\/p>\n In comparison, powders, whey and whey products and butter exports continued to grow year-on-year. Exports of whey recorded a new five-year high. Powders saw the biggest year-on-year increase, up by 5,300 t: bound for non-EU nations such as Asian countries (Pakistan, Malaysia, Indonesia, Bangladesh), Algeria and the United Arab Emirates. This was followed by exports of whey and whey products, which increased by 3,600 t and butter by 2,200 t during the period. Exports of powder picked up year-on-year after declining in the second half of 2024.<\/p>\n Though overall exports to the EU declined, they constituted around 90% of total UK exports. Ireland, Netherlands, France, Belgium, Germany and Poland are the major recipients. In Q1 2025, exports to France increased by 30% to 10,000 t, Germany increased by 80% to 5,400 t and Poland increased by 16% to 3,900 t. Conversely, exports to Ireland declined by 11% to 221,000 t, Netherlands declined by 7% to 20,100 t and Belgium declined by 14% to 7,300 t. Exports to non-EU countries like Morocco, Saudi Arabia, and some Asian and African countries also declined during the period.<\/p>\n<\/p>\n
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