Commodity prices continue to rise both at home and globally on the back of tight production and strong demand. The latest GDT average price index rose by 1.4% at the event held on 7th December, to average a record $4,290. All seven products offered recorded an increase on the previous event. Butter increased by 4.6% to $5,791 with SMP and WMP both up by a further 1.3% and 0.6% to average $3,721 and $4,008 respectively.
Production is expected to remain tight. The AHDB has revised its forecast for deliveries in 2021/22, down again to total 12.4bn litres; 1.2% less than in 2020/21. In September the levy board was predicting a 0.2% year-on-year decline. It is normal for milk yields to rise by about 2-3% per year. However, this year, between July and November average milk yields have shown no improvement compared with the same period in 2020. Furthermore, for the month of November the AHDB is reporting that average yields were actually 1.4% lower on the year, hence GB production falling further behind last season through the autumn.
We still await the official production figures for November from Defra, however the AHDB has put GB production for the month provisionally at 977m litres, some 3.1% below November 2020. In addition, daily deliveries for the week ending 4th December averaged 32.49m litres, 4.2% behind last year’s levels. Rising input costs continue to limit any push to increase production, even with significant increases in farmgate milk prices (see below). We may not see yields increasing now until spring calving commences.
Lower deliveries has resulted in product shortages and is seeing some significant farmgate milk price rises to record levels; below are a sample:
- Suppliers to Yew Tree Farm will receive a 3ppl increase from 1st January, taking producers’ liquid standard litre to 33.5ppl
- First Milk members will receive a 2ppl increase, also from 1st January, which will result in producers’ manufacturing standard litre reaching 34ppl and the liquid standard litre at 33ppl
- Saputo has announced a 2.35ppl increase from 1st January, taking its manufacturing standard litre price to 35ppl and the liquid standard litre to 33.75ppl
- Muller had already announced a 2ppl rise from 1st January for its direct suppliers, but has now revised this to 3ppl. This takes the standard litre to 33ppl. And it is good news for those who took advantage of the fixed price contract from Lidl (see article https://abcbooks.co.uk/muller-lidl-deal/) these will also see a 4ppl increase in their price, taking it to 33ppl as well.
- Currently topping the table are Waitrose (Muller) aligned producers, who will receive a 2.5ppl increase taking their standard litre price to 36.85ppl.