Hopes for quick market recovery dashed by volumes of milk

Figure 1. UK wholesale prices from early 2023 to April 2026

Figure 1 shows average UK wholesale prices from early 2023 to April 2026 for bulk cream, butter (unsalted), skimmed milk powder (SMP) and mild Cheddar, measured in pounds per tonne.

Butter prices remain consistently higher than the other products, although are now at the lowest levels seen in the period. All four products show a steep decline from late summer 2025 into early 2026, followed by modest recovery in February and March 2026 with butter, cream and Cheddar declining in April and only SMP seeing growth.

SMP shows the strongest improvement in early 2026 compared with the other products. Bulk cream remains the lowest‑priced product across the period.

Why have markets gone into reverse? 

Unfortunately, milk volumes globally and in the UK  are continuing to run ahead of demand, which is putting pressure on markets. 

Fats are the worst affected, with the increase in supplies dropping bulk cream prices by 20% in April and sending butter to £3,540/t which is the lowest seen since September 2021. Cream is now worth 53% less than a year ago and butter 41% less. 

Cheddar also lost 3%, but this was offset by growth in the whey price.

Growing consumer demand for protein due to health trends and the growth of weight-loss drugs is the saving grace. SMP has still seen some increases and is the only commodity worth more than a year ago. This has been underpinned by low production in the USA and competitive pricing in the global market driving exports. 

The latest GDT auction on 5 May 2026 showed continued growth for milk powders – WMP up 2.2% and SMP 3.0% but butter continues to fall, down another -2.6% and Cheddar -3.6%. 

What about farmgate prices?

The impact on farmgate prices is mixed.  Some processors have started to put prices up a little in response to the increase in commodity markets seen in Q1, but price movements in April could see these gains lost. Others have held so far until the flush is passed, waiting for clearer market direction.

Is the war in Iran playing a role? 

The war in Iran is likely to have some impacts but currently the bigger driver is milk volumes. 

However, we are likely to see some impacts on export demand which means more milk stays on our shores. 

We may see extra pressure on markets from displaced product – i.e. cheese or butter that would normally have gone to the Middle East from the EU or New Zealand looking to be sold elsewhere.  This could make it harder for us to then sell our products to that third country, or they may enter our market. 

On the farm production side, the war in Iran is having a huge impact on input costs, with fertiliser already up by over a third and red diesel costs escalating. Feed costs have started to rise a little as well, but this has been driven by dry weather in the USA. 

This means that farm margins will be squeezed at both ends – weaker milk prices and costing more to produce at a time of year when farmers need to pay for contractors, fertilisers, diesel and a large tax bill. 

What can farmers do?

Farmers should continue to monitor market signals, manage costs carefully and plan production strategically, particularly as we pass through the spring flush. 

Milk supplies are beginning to ease – the latest week (to 25th April 2026) saw a slight decline of -0.3% – which will need to continue.

While market conditions remain challenging, with pressure from both milk prices and rising costs, there are practical steps you can take to protect margins and strengthen your business.

Our tools, calculators and guidance can help you:

• Review costs and see where money is being made or lost
• Test decisions around herd size, feeding, calving patterns and investment
• Improve efficiency and make the most of home-grown resources
• Plan cash flow and prioritise actions during a difficult period
• Benchmark and make the most of your milk contract

Explore tools and guidance to protect your margins

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