Dairy commodity update

Commodity watch by policy officer Andrew Robinson

At the latest Global Dairy Trade (GDT) event, 19 November 2024, an increase in GDT of 1.9% has been reported, further to the 4.8% increase reported at the previous event which took place on 5 November 2024. With the next GDT event scheduled 3 December 2024. On the latest GDT Butter increased 0.5% to finish at $7,008. Cheddar was back 3.1% to finish at $4,834 down from $4,973. Skimmed milk powder was up 0.9% to finish at $2,882 and whole milk powder was up 3.2% to finish at $3,862, the highest reported from 8 July 2022. Recent strength in the GDT and tightening supplies across the continent are what's likely to drive increased farmgate milk prices over the coming months.

When looking at production levels, Great Britian production for this year's milk season (April - October) totaled 7,259 million litres, down 0.2% when compared with the same period for 2023. Milk production in Northern Ireland equated to 17% of the UK milk pool for the 2023/24 season. Milk deliveries across GB are estimated to have reached 1,029 million litres in October, an increase of 2.5% when compared to October 2023. With daily deliveries averaging at 33.2 million litres per day. Milk deliveries across NI are trending above production levels for 2023, and the five-year average, up onto recently GB were trending below production levels for 2023. August milk deliveries in NI were up 4% on production levels of August 2023, GB deliveries for August were down 0.5%.

Declined global production has helped to sustain an upward trend in GB and NI farmgate milk price rises since May. Across Europe milk deliveries averaged 376.6 million litres daily in August, a 3.6 million litre daily reduction when compared with August 2023 figures. Within Europe mixed trends have been reported with Poland, France and Austria reporting increased production whilst production in Italy, Germany, the Netherlands and Ireland were all back. Regulatory changes, BTV and poor weather have contributed to this decline. A decline of 4.9% in Irish milk production from January to August has limited the availability of butter and cheese entering the UK market and ensured an export of extra milk from North to South in Ireland.

The UK average milk price for September 2024 was 43.06 p/l up 1.48p on August. For August the average price paid for milk in NI was 0.9% higher than the average price paid in GB, with the NI average price stated at 41.87 p/l.

Given the challenges dairy farmers have faced over the last 12 months and challenges they've yet to face, a strong milk price will go a long way to ensure they can continue to operate in a way that will allow them to continue to feed the nation, in a sustainable and viable manner.