Weekly dairy market update (2-6 November)

Monday, 9 November 2020

By Patty Clayton

Markets held up reasonably well in the first week of the English lockdown. At a GB level, there had already been slower trade due to the previous restrictions on trade in Scotland and Wales. In England, the drop in orders for dairy products was not as severe as in the first lockdown as take-away and delivery services continued to operate. The advance notice of the restrictions also helped mitigate against widespread cancellations, while the availability of processing capacity helped mitigate against spot markets being overwhelmed.

Spot milk  27-30ppl

Prices were reported to have seen little change in the week, although the lockdown didn’t occur until the Thursday (5 Nov). Retail orders had been higher in anticipation of the lockdown, which helped to offset the drop in foodservice sales. While it was reported that more milk was available, and demand down, the ability to divert milk into processing meant prices didn’t drop drastically.

Bulk cream  £1,250 - £1,320 /tonne

Prices came under pressure from a drop off in demand in both domestic and export markets. Increased liquid milk processing for higher retail orders boosted availability of bulk cream as did lower orders of bulk cream from the domestic foodservice sector. Demand on the continent probably had a bigger impact on prices, with lockdowns in Europe affecting sales, compounded by concerns over sourcing UK product. Prices on spot markets fell early in the week to lows of around £1,250/tonne, but then rebounded at the end of the week to £1,300 - £1,320/tonne. Cream had been trading in the mid £1,400s per tonne in the previous week.

Butter  £2,900 - £3,050 /tonne

Prices continued to soften for butter, but due to lower demand from the EU rather than any direct impact of the lockdown. Butter prices are typically slower to change than cream, due to the ability to store product, and it is likely that buyers and manufacturers will wait to get a better feel for how consumption will shift before adjusting prices. Expectations are for a less dramatic upturn in retail demand as schools have remained open, allowing parents to continue working.

 

Patty Clayton

Lead Analyst - Dairy

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