Lower cream prices to hit liquid processor returns

Thursday, 16 April 2020

By Patty Clayton

Following the lockdown and subsequent loss of foodservice markets, prices for bulk cream have plummeted. For manufacturers of liquid milk, this has dented the value of the surplus cream generated from milk sales, which has been on a downward trend since May 2018.

In the first three weeks of April, cream prices have dropped by 38% from the March average of £1,280/tonne. The latest quotations put cream prices in the region of £800/tonne, slightly better than the previous week as some EU buyers returned to the market.

The impact of this drop in cream values has reduced the estimated cream income to a liquid processor** from 7.21ppl in March to 4.97ppl on average so far this month. This is the lowest value recorded since May 2016.

**not all processors will realise this value as it will depend on whether they sell or buy bulk cream. It will also vary depending on the actual fat content of milk delivered by their milk pool and how they use any excess cream.

Patty Clayton

Lead Analyst - Dairy

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