Whilst UK average milk prices have fallen by much less than elsewhere in Europe – with price 6.8% lower in April 2009 compared with April 2008. UK milk deliveries fell again in May by a provisional 2.3% following a slight year on year uplift in April. This means a tightening of milk availability is now looming with milk output on its downward seasonal path. This is helping to keep UK market prices steady or, in the case of cream, showing some improvement. This upward tendency might have been even stronger if Sterling had not been strengthening against the Euro which has had the effect of pulling down the UK butter support price. By 19 June, this reduction for butter amounted to around £80 per tonne in the past month whilst the currency effect on the SMP support level is a reduction of about £60 per tonne over the same period.

With declining UK output, butter prices have been firm and are being pushed upwards by the rising returns from cream, both in the UK market, where the soft fruit season has a clear influence, and for exports to the Continent. Intervention for butter in the UK has stopped as market prices are now higher than the support level. The same is not true for SMP where intervention is in regular use and the market is influenced by the stronger currency.

The UK cheese market remains fragile, particularly for cheddar, whilst there is now less selling at discounted prices, there has been no significant improvement overall. One noticeable trend so far this year is the decline in imported speciality cheese volumes. For more information on UK dairy imports click here

Notes: The bulk cream wholesale price is based on an ex-dairy spot price for cream at 40% butterfat, for export. Butter and cheese prices are also based on spot prices and relate to larger quantities of a container or more on a delivered price basis. Larger contracts may be made on a lower price basis. The SMP price is based on spot and longer term contract prices. Prices were derived from talking to traders and milk processors during the period 18-22 June. The published prices will not necessarily match the actual price received by a milk processor as this will depend, amongst other things, on the proportion of product that is sold on the spot market and the proportion sold under longer term contracts and at what price this is done.