Dairy Crest formula milk price drops after recovery

Dairy Crest’s formula price has slipped back slightly after last month’s small rise.

The cost-tracking contract has dropped 0.044p/litre to 31.975p/litre for August, though that includes the 0.19p/litre premium for those who signed up in April.

Cream prices recovered to £1,400/t in June and the four-pints retail price rose by a penny to 117p, but this was offset by falling fertiliser and feed costs.

Michael Masters, secretary of suppliers’ group Dairy Crest Direct, said this was the second consecutive month where the formula was leading the processor’s standard liquid price of 31.31p/litre.

Last month the formula rose 0.028p/litre – the first rise since it was relaunched in April.

“As cream markets are anticipated to rise over the next few months as milk production falls seasonally, feed market prices are falling as both energy and protein elements are declining in value per tonne,” he said.

“However, due to the formula’s rolling sequencing, the predicted cream market increases may potentially counterbalance the farm costs reductions.”

Dairy Crest suppliers can still commit a proportion of their milk on the formula this October or in January 2015.

UK farmers produced 1.24bn litres of milk in June, 5.2% higher than a year earlier, according to the latest Rural Payments Agency figures.

In the milk year so far, the UK has produced 3.85bn litres and is running 8.5% ahead of 2013-14.