UK wholesale prices
Updated 27 May 2020
Indicative average prices for UK dairy wholesale markets, including bulk cream, butter, skimmed milk powder (SMP) and mild Cheddar cheese.
After last month’s disruption to markets caused by the loss of foodservice demand, markets have seen strong recovery in May. The main driver appears to be elevated demand in Europe as lockdowns are eased and foodservice outlets look to re-stock. Reduced milk production, due to farmers’ actions and drier than normal weather, combined with the relatively high volumes of cheese and butter entering PSA, is adding urgency to the markets, and prices moved up quickly in the latter half of the month.
Markets were relatively stable in the first half of May, but quite dynamic in the second half. Published averages should be looked at in conjunction with our weekly market updates which provide more detail on how markets have developed through the month.
- Butter markets improved through the month as lockdowns eased and buyers starting looking to refill supply chains. The reduced availability due to PSA and the declines in milk production also pushed up quotations.
- Cream markets were again quite volatile through the month, with prices ranging from £900/tonne at the beginning of the month to over £1,350/tonne in the past week. Strong demand from the continent, the drop in milk production and buoyant butter markets have all added strength to cream markets through the month.
- SMP prices also improved in May, although to a lesser extent than seen in fat markets. Although stocks are likely to be ample following the peak season, and little has gone into PSA, restocking of foodservice pipelines has boosted demand and pulled up prices in the latter part of May.
- Mild cheddar markets remain split. Product for retail markets has seen no change in pricing. Some demand is returning for commodity Cheddar, although this remains at low levels. The gradual reopening of fast food outlets and some extra demand from the institutional catering sector, now that they have worked through excess stocks, has helped to firm up prices for this segment of the Cheddar market, pulling up the overall average slightly.
Prices have been compiled by talking to dairy product sellers, traders and buyers. Panel discussions on market conditions and prices covered trades agreed for the period 1 to 26 May. Prices reported are indicative of values achieved over the reporting period for spot trade (excludes contracted prices). The published prices will not necessarily match the actual price received by a milk processor as this will depend, amongst other things, on the proportion of product that is sold on the spot market and the proportion sold under longer term contracts and at what price this is done. The “average” prices should be used to track trends while the commentary will contain prices seen through the month.