July dairy market review

GB milk deliveries totalled 1,025 million litres in July, equal to the five-year low from 2018 and in line with our baseline production forecast. 

This brings GB production for the season to date (Apr-Jul) to 4,308 million litres, 1.5% (65 million litres) behind the same period in 2021. 

Looking ahead, our latest dairy market outlook suggests milk deliveries for 2022 will be down by 1.6%. 

Milk production in the key exporting regions for 2022 is also expected drop from last year. Based on forecasts made earlier in the summer, global milk supplies look set to be 0.5% lower or the year.

UK wholesale markets saw some weakness in July month. This is not unusual for July, as the summer holiday season means there is reduced buying activity. Alongside this however, there were signs of reduced demand in response to high prices. 

The lower wholesale values meant we saw both market indicators move down in July, reducing the average milk market value (MMV) by 1.2ppl. This is the first drop in the MMV since July 2021. 

Retail prices for dairy products are also rising after years of relative stability, in response to higher wholesale market values and the recent upsurge in production costs.

Increases to farmgate milk prices continued to trickle through in July and August, helping to offset the continued inflation in input costs. 

With production continuing to run behind last year’s volumes, the need to keep milk prices in line with rising input costs remains. 

Our latest outlook suggests key input costs will remain at high levels through the winter. Feed costs could face a double hit from higher prices and higher purchases as many farmers use conserved forage early to compensate for the lack of grass.

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