March 2025 dairy market review

Milk production

GB milk deliveries are estimated to have totalled 956 million litres in February, up 1.2% compared to the same period in 2024 on a 28-day equivalent basis due to the leap year. Deliveries averaged at 34 million litres per day.

For this year’s milk season far (April-February), production totalled 11,331 million litres, a 0.9% increase compared to the same period in the previous milk year. Good dairy economics have supported production growth during the winter months. 

The GB dairy herd recorded a 0.9% year on year decline in the latest BCMS data. Most of the decline came from youngstock, who are not yet contributing to milk yields, but may impact output long-term. Much of this change is likely a result of greater use of sexed semen, with over-serving dairy semen in 2022. A decline of older cows also points towards greater efficiency.

Additionally, n the fourth quarter of 2024, calf registrations to dairy dams in GB totalled 314,000 head according to the latest BCMS data. This is a decline of 46,000 (12.7%) head compared to the same period in the previous year and also marks the lowest figure recorded in the fourth quarter.

Looking at the full year data for 2024, registrations were recorded at 1.48 million head. This was 36,300 (2.4%) head lower compared to 2023. Year on year increases recorded in Q1 and Q3 were dragged down by significant decline in Q4.

BCMS data also showed a decline in the GB milking herd, driven by decline in the number of younger cows.

Drier than average weather in February, which continued into the beginning of March, should boost forage quality and quantity compared to the very wet conditions of 2024. As we approach the spring flush, a continuation of good weather would allow cows to get out on the grass earlier.

AHDB held the latest iteration of the bi-annual Milk Forecasting Forum on 18^th March. Discussions centred around the extremely positive milk to feed price ratio, herd numbers and the likely impact of BTV on milk production.  The full forecast will be published before the end of March.

Wholesale markets 

Overall commodity prices edged downwards in February, although it is noted that prices remain historically high. Most commentators felt there was still coverage to fill for Q2 but that across product categories both buyers and sellers were not overly active on trade this month. It is believed there is a ‘wait and see’ approach being taken on milk volumes and therefore product stocks.

Bulk cream reported marginal movement month on month, easing just £4/t on average. Prices were reported to have steadily moved lower throughout the period, starting at around £2.70/kg and ending around £2.50/kg.

Butter prices saw the largest change month on month, down £260. Fats markets were said to have eased off more significantly in the latter half of the reporting period, although it was mentioned that some site issues and plant maintenance may have fed into this. Stocks are still reported as low despite improving milk production. 

SMP and Mild cheddar markets were both reported as stable and quiet. Prices slipped month on month by £70/t and £30/t respectively. Price ranges for both products were very narrow.

Farmgate milk prices 

The latest published farmgate price was for January with a UK average milk price announced by Defra as being 46.01, down 0.57 pence (1.2%) on the previous month. 

Latest announced farmgate prices were fairly steady in March.  Two contributors of the AHDB League table lowered prices, whilst one made a positive price announcement.

On retailer aligned contracts, prices mostly held, with some upwards movement. The Co-op, M&S and Tesco held their prices for the month, while Sainsbury’s announced an increase of 0.11ppl after three months of price decreases.

Non-aligned liquid contracts all held their prices this month including Muller Direct, Freshways, Crediton Dairy, Payne’s and Pembrokeshire Creamery.

A few cheese contracts saw some negativity, likely as a result of exuberant milk volumes ahead of the flush. Wyke Farms and Wensleydale Creamery announced price decreases of 1.55ppl and 0.39ppl, respectively. Meanwhile, price holds continue for Leprino Foods, Barber’s, First Milk, Parkham Farms and South Caernarfon Creameries.

Manufacturing contracts also remained stable for the month.

Product availability

As UK milk deliveries in the fourth quarter of the calendar year 2024 amounted to a strong increase of 3,727m litres (4.4%) year-on-year. The spectacular growth in milk deliveries during the period was in response to high milk prices, lower feed costs and favourable weather conditions. Overall, the increase in milk deliveries boosted the production of all dairy products during the fourth quarter of 2024.

Cheese production increased by 1% (1000 tonnes) and imports edged up by 3% (3000 tonnes). Exports also declined by 5% (3000 tonnes) during the period, thereby uplifting supplies. Good demand in the domestic market fuelled imports.

Butter production increased by 6% (3000 tonnes) year-on-year in Q4 as commodity prices eased on UK wholesale markets but remained at historically high levels.  Higher production increases availability for exports but only if prices are attractive. Overall higher imports of 16% (2000 tonnes) coupled with slight increase of exports (400 tonnes) drove available supplies higher by 9% (4000 tonnes).

Milk powders remained in excess for another consecutive quarter with increased production and imports and falling exports. 

Trade

AHDB published their round-up of global dairy trade for 2024.

Key highlights showed:

• Total UK dairy export volume for 2024 declined marginally by 0.3% at 1.22 Mn tonnes
• Growth in exports of cheese and curd, whey and whey products, yogurt, milk and cream were outweighed by decline in exports of powders and butter
• Total UK dairy import volume for 2024 grew by 8.3% year-on-year at 1.25 Mn tonnes
• Yogurt and cheese continue to dominate the import basket

This means that of total dairy* tonnage, a UK trade deficit of 22k tonnes occurred in 2024, following a surplus in 2023.

• Total ‘net exports’ decreased by 4k tonnes compared to the 26k tonne increase recorded in the previous year.
• Skimmed milk powder recorded a trade surplus of 39k tonnes, whilst all other categories recorded a trade deficit.
• Cheese was the only product to see a reduction in the trade deficit (-1k tonne).
• All products except from powders recorded an increase in import volumes in 2024, the largest coming from yogurt (+93k tonnes).
• In value terms, the overall trade deficit increased in 2024, reaching £1.63bn for all dairy products. This compares to a deficit of £1.34bn in 2023. Declining value of exports and increasing value of imports added to the overall increase in deficit.
• Yogurt was the key contributor to movement in the value trade deficit, as the category trade deficit grew by £146mn year-on-year.

Retail demand

During the 52 weeks ending 22 February 2025, volumes of cow’s dairy declined by 0.5% year-on-year (NIQ Homescan POD, Total GB).  Spend on cow’s dairy grew by 1.4% year-on-year, driven by growth in average prices of 1.9%.  

Cow’s milk volumes continue to decrease (-1.9%) year-on-year (NIQ, 52 w/e 22 February 2025) with a corresponding decline in spend of -3.9%, driven by a decline in frequency of purchase and volume purchased per trip. Declines were seen for both semi-skimmed and skimmed cow’s milk, while whole milk continued to see volume growth (+3.0%) primarily driven by an increase in shopper numbers. 

Cow’s cheese remains in volume growth, up 4.4% year-on-year, and spend increased by 2.7% despite average prices decreasing by 1.7% (NIQ, 52 w/e 22 February 2025). Cheddar, which represents 41.4% of all cow cheese volumes, saw a 5.7% increase in the volumes purchased per shopper, and an increase in shopper numbers.

Cow's butter, at a total level, saw a spend increase of 1.5% but a volume decline of 2.8% (NIQ, 52 w/e 22 February 2025), driven primarily by a decline in sales of butter spreads (-6.6%). Block butter, however, continued to see volume increases of 6.9%.  Plant-based spread volumes also continued to increase (+6.2%), potentially driven by lower average prices.  

Cow's yoghurt, yoghurt drinks and fromage frais volumes continue to grow (+6.1%), with spend increasing by 7.8% (NIQ, 52 w/e 22 February 2025).  All products saw volume growth during the period, with the exception of fromage frais. Cow’s standard plain yoghurt saw the fastest growth of 23.8% year-on-year, while cow’s healthy yoghurts saw the greatest actual growth with a 15.0% increase year-on-year. 

Cow's cream volumes grew by 1.7% year-on-year, primarily driven by increased frequency of purchase as well as an increase in volume per shop (NIQ, 52 w/e 22 February 2025). Double and sour cream both experienced volume growth.  

See the full data and these insights visualised on our GB household dairy purchases retail dashboard.  

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