Milk prices set to take off

The farmgate milk price has risen by nearly 24% during the year ending March 31, 2022. For most of this time, prices tracked the five-year minima, but started to rise steeply from January and into February, closing the gap on five-year highs as the spring flush appears on the horizon. This is the time of year when the majority of UK dairy farms plan for calving, since there is usually strongly growing grass and the longer days promise more favourable weather for the next generation of cattle.

With a high proportion of cows starting a lactation in a normal year, milk volumes would go up, reaching a peak later in the summer. A slower start to the spring flush is a marker for a more difficult year, while the rising farmgate price gives cause for concern, since it would suggest that there are fewer lactating cattle to supply the market.

There is, however, another factor that will push producer prices up. The UK dairy industry has a lot of milk tankers on the road and unprocessed milk is a high mileage market. Steep rises in fuel costs will also impact the headline producer price of milk. source