Milk prices rise for September as costs fall marginally

Producers supplying Tesco will receive a 1p/litre increase in their farmgate milk price for September, according to milkprices.com.

Dairy farmers supplying Tesco on Muller contracts will receive 47p/litre for September for a standard liquid litre of 4% butterfat and 3.3% protein, up from 46p/litre in August.

Prices for September 2022 are up by 14.34p/litre compared with year-earlier levels.

See also: Additional milk price rise for Arla producers

The Tesco Sustainable Dairy Group producers who supply through Arla will also have a 1p/litre increase in September, with prices at 46.75p/litre after haulage.

These contracts are both based on cost-of-production modelling. However, despite the cost tracker showing a slight month-on-month decrease for on-farm costs in September, the milk price has been increased.

Based on the Promar cost tracker used by Tesco contracts, the most recent overall cost-of-production estimate for September dropped from 42.91p/litre to 42.59p/litre, after factoring in the most recent adjustments to fuel, feed and fertiliser prices.

Co-op

Dairy producers who are part of Muller Co-operative Dairy Group will receive a farmgate milk price of 47p/litre for September.

This is based on a standard liquid litre of 4% butterfat and 3.3% protein.

September prices are up by 0.67p/litre on the previous month and 15.55p/litre compared with the same month last year.

Sainsbury’s

The farmgate milk price for Sainsbury’s producers that supply through Muller will stand on at 47p/litre for September for a standard liquid litre.

Producers supplying Sainsbury’s through Arla will receive 46.88p/litre after taking into account a 0.12p/litre haulage charge.

The Sainsbury’s Dairy Development Group cost model recorded a small decrease in September from 42.5p/litre to 42.48p/litre, due to costs for both feed and fertiliser dropping very marginally.

A forecast cost tracker price of 42.5p/litre is being used as an indicator for October and November in order to help producers with budgeting.

Autumn input costs

Milk deliveries are forecast to be down 1.6% in volume during 2022, according to AHDB estimates.

Patty Clayton, AHDB lead dairy analyst, said that with production continuing to run behind last year’s volumes, the need to keep milk prices in line with rising input costs remained.

“Our latest outlook suggests key input costs will remain at high levels through the winter,” she said. “Feed costs could face a double hit from higher prices and higher purchases as many farmers use conserved forage early to compensate for the lack of grass.”