Projected farmgate milk price changes

Updated 25 June 2024

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

• UK dairy wholesale prices lifted in June for all products as concerns about product availability follow a subdued and delayed spring flush.
• Average prices for butter increased 11% compared to May, whilst SMP saw smaller growth of 2%. AMPE subsequently moved up by 3.4p month on month to 40.5ppl, the highest it’s been since November 2022.
• MCVE followed the same trend, gaining 1.8p in June to sit at 38.2 ppl. Stronger mild cheddar prices contributed to this growth, up 4% from May’s prices.
• These changes resulted in the market value of milk (MMV) strengthening by 2.1p to sit at 38.7ppl in June.
• As we see continued depression in milk deliveries, prices may find some more support from tightened supplies over the coming months.
• The market indicators have been updated to reflect returns based on cost data up to Q4 2023 and will be updated with Q1 2024 data in July 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.