Falling by-product prices weigh on cheese returns

Wednesday, 9 October 2019

by Kat Jack

The mild Cheddar price has been remarkably stable recently, staying at £2,830/tonne for the last six months. Despite this, the return processors get for producing that Cheddar (Milk for Cheese Value Equivalent or MCVE) has been declining. This is due to the decreasing value of the by-products.

AHDB's MCVE indicator calculates the return from producing mild Cheddar with whey powder and a small amount of whey butter as by-products. Over the six months that the Cheddar price has held steady (Apr-Sep 2019), the estimated values of whey powder and whey butter have gone down 13% and 7% respectively. The overall impact is a 2% decline (0.7ppl) in MCVE between April and September.

Over the same time period, the value of AMPE has risen by 7% and is currently only 0.2ppl below MCVE – the smallest difference in over a year. However this is almost entirely due to a jump in the value of AMPE in September, with SMP and butter both recording month on month increases for the first time since January.

Katherine Jack

Analyst - Dairy

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