Projected farmgate milk price changes

Updated 25 March 2024

These projections indicate the expected movements in farmgate milk prices for the next three months, based on movements in the dairy markets.

• UK wholesale prices were more subdued in March as we begin to approach the spring flush. Average prices for butter stayed the same month on month, while SMP saw prices ease further by 5%. AMPE subsequently moved down 1.0p to 36.6ppl.
• MCVE also recorded a slight decline in March, down 0.5p to 36.3ppl as prices for mild cheddar fell 1% month on month.
• These price changes overall resulted in the market value of milk (MMV) falling by a further 0.6p to 36.3ppl.
• With milk production running tight, future adjustments to farmgate milk prices are likely to be based off the performance of the incoming northern hemisphere flush as processors evaluate their supplies.
• The market indicators have been updated to reflect returns based on cost data up to Q3 2023 and will be updated with Q4 2023 data in April 2024.

• The projected change is based on the strong link found between movements in the value returned to manufacturers from the market (MMV) and movements in farmgate milk prices.
• On average, it was found that a 1ppl change in the MMV will lead to around a 0.5ppl change in the overall GB average milk price, generally three months’ later.
• Differences will arise due to the markets in which milk buyers operate as well as the mechanism they use to set the milk price. These will impact the timing of price movements as well as the size of the change.
• Other factors which are likely to impact milk prices will be the degree of competition for milk in the market, changes to available processing capacity, import competition and contract negotiations.
• [1] The Milk Market Value (MMV) is a weighted average of AMPE and MCVE on a 20:80 basis. This was found to be the best predictor of movements in farmgate prices based on historical data. The analysis was done excluding prices paid on retailer-aligned contracts. The impact of the adjustment of AMPE and MCVE following the 2020 review has been accounted for, and the model updated.