Ahead of the annual Scottish Dairy Hub/Kite Consulting seminar at AgriScot this Wednesday (19 November) at 1.00pm, dairy analyst and journalist Chris Walkland, who will open the seminar, outlines the rollercoaster ride that the sector is now on, and looks to the negatives and positives as we head into a challenging spring.
In an exclusive blog for NFU Scotland, Chris writes:
What a year!
DEFRA has now released its milk price for September, at 46.54ppl, which is the 15th consecutive months where prices have topped 40p.
The volume of milk produced in September was 1,239 million litres.
This means we can tally up and compare milk incomes for the first nine months of 2025, and no one should be surprised to learn that the generally good milk price (for most) twinned with the record high volumes have resulted in the highest dairy incomes on record.
Thus, the milk price train has been steaming along at pace. And nobody saw the buffers in the way that heralded the abrupt end of the line.
This November, as all dairy farmers will now know, the aforementioned train smashed into the buffers at full speed… with, it must be said, a very varied impact on prices.
Those in the aligned retailer pools have not felt so much as a jolt - in fact, some of their prices have increased markedly! Others have felt the bump, but their prices haven’t been derailed (yet!), and they are down 1p to 3p per litre.
But for others there’s carnage. For Scotland, the biggest faller is First Milk, which is down 9p in three months to 34.72p on a standard litre and 35.85p on a manufacturing one.
And the lowest price in the UK is Yew Tree, including the many Muller Yew Tree suppliers in Scotland, at around 30p on a standard litre. The only crumb of comfort that suppliers to the Muller Skelmersdale plant can take is that the new 40 per cent liquid:60 per cent ingredients contract kicked-in in November and had it not done so their price would be nearer 26 - 27p per litre. In contrast the highest price being paid is 46p per litre, by Waitrose.
It’s a 50% differential between highest and lowest milk prices.
Overall, for November, 18 processors out of the 26 major ones who publish their prices (excluding retailer pools) dropped their prices, and another 16 have so far cut prices for December. More will follow.
Whether there will be more reductions at the end of this month for January is currently hard to read. I think so, alas - and those at the top of the table will cut the most.
Arla, at just under 41p per litre, is almost certain to cut a few pence, as I think will Muller as the cream price has dropped £1.00/kg to the £1.70/kg zone in ten weeks.
The cream income processors are getting from cream is now less than 10p per litre compared to a recent peak in August of 15.5p. Grahams has just dropped 3p in December to 39p per litre, having (surprisingly and against the grain!) held for November. It means that for Q4, Grahams has been the fourth best paying processor in the UK!
Looking ahead, I can see some commodity price stability in December because of the usually bullish trading period, and there are some signs of that in the markets.
Although EU commodity prices are continuing to drop, with Dutch falling another €50 in the first week of November to €5100 per tonne, there’s a lag on this and spot prices are falling further, to as low as €4500 per tonne, I’m told.
UK butter is around £4500 to £4600 per tonne. Skimmed milk powder (SMP) prices are also very low and near to the €2000 per tonne threshold - the lowest price since Covid. Mild cheese prices have fallen to as low as £2850 per tonne, but there might be some hope - prices might have stabilised now as this week Stone X’s cheddar price is up £50 this week to £2,970, with mozzarella up £90 to just under £2,600.
Interestingly, for Q1 next year, cheddar is up £45 to top £3,000 per tonne again, and mozzarella is up a very decent £135 to top £2,700 per tonne. They are the first price increases for weeks, but I’m afraid they aren’t going to result in a breakthrough in milk prices much at all. Q1 is never good for the dairy markets, and further dips can’t be ruled out.
What we can be sure of, though, is that with milk volumes being so huge all over the world (the UK up 7 per cent for September, the EU up 4.5 per cent and the US up 4 per cent) and the Global Dairy Trade auction being in negative territory for six consecutive auctions (with more drops to come), prices aren’t going to increase markedly anytime soon.
Dairy farmers need to be prepared for a sustained period of prices being around 30 to 35p per litre (for some) for perhaps as long as eight or nine months.
I’ll be giving my latest price predictions and view on the outlook at the Scottish Dairy Hub/Kite Consulting dairy seminar at AgriScot on Wednesday 19 November at 1.00pm, in the upstairs seminar room.
I’ll say it as a I see it. Dairy farmers are not going to enjoy what I’ve got to say so don’t shoot the messenger! But there are always positives, and while the going will be tough for a while it won’t be so for ever.