Projected farmgate milk price changes

Updated 24 November 2023

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 saw strong increases across the main product categories in November. Average prices for Butter and SMP were up 13% and 3% respectively compared to the previous month. AMPE subsequently increased by 3.1p to 37.7ppl.
• MCVE also recorded an increase month on month, up 2.0p to 36.5ppl as prices for mild cheddar also grew 3%.
• These price changes overall resulted in the market value of milk (MMV) increasing 2.2p in November to 36.8ppl.
• With milk production volumes now falling year on year, we may see some pressure easing off farmgate milk prices in the new year.
• The market indicators have been updated to reflect returns based on cost data up to Q2 2023 and will be updated with Q3 2023 data in January 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.