Weather and feed costs reduce GB milk forecast

Tuesday, 21 September 2021

By Kat Jack

GB milk production is now expected to reach 12.52bn litres for the 2021/22 milk year, down 0.2% on 2020/21, as of our September forecast revision. This is a reduction compared to our June forecast, when 0.3% growth was predicted. The change has come from both actual deliveries since June, and adjustments to the forecast.

 

Over the summer, we saw the fastest drop from peak in at least 10 years. This meant that deliveries ran below forecast for most of the last quarter. The June forecast predicted that 3,125m litres would be delivered in the June-August period. Instead, only 3,101m litres was delivered – 24m litres (0.8%) less. This was partly due to the hot weather in July, as well as a slight shift in calving patterns, as autumn block calving is thought to be bringing the trough slightly earlier.

Going forward, we are expecting production to run below year-ago levels until the new year, as market conditions aren’t likely to encourage expansion. Although the milk price has been above the 5-year average, feed prices remain high. Our milk to feed price ratio indicates that margins are being squeezed – and that’s before other rising costs like labour and energy are considered. We believe this means farmers are unlikely to incur the extra cost required to push for maximum yields.

Additionally, deadweight cow prices have been running very high this year. Paired with high feed costs and high youngstock numbers, this could encourage some farmers to have a clear out of less productive animals over the winter. Therefore, we have slightly lowered herd expectations compared to the previous forecast.

Looking ahead to 2022/23 season, we are expecting the first half of the season (April-September) to run slightly ahead of this year. This is assuming decent weather conditions, whereas this year poor weather dampened spring production. 


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Image of staff member Katherine Jack

Katherine Jack

Analyst - Dairy

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