Milker trade back £100-£300 amid milk price cuts

First signs of faltering confidence have been seen in the milker trade as dairy farmers anticipate April milk price reductions by bidding to a stricter budget.

Auctioneers say resistance is inevitable as processors announce cuts. However, a better cull trade is tipped to continue to underpin milker values.

Many barren cows have made £1,500 a head or more recently, and deadweight base prices have been around 430p/kg.

Another complication weighing on some minds is managing a potentially hefty tax bill in 2024.

See also: Large milk price cuts intensify pressure on dairy farmers

But while milk prices have already fallen from the December Defra farmgate average high of 51.55p/litre to 49.2p/litre in January, feed and fertiliser prices are also easing.

Consultants and auctioneers believe most farmers will really start to feel the pressure if prices drop to about 40-44p/litre.

Big getting bigger

Sale ring demand has been helped by a dearth of dispersals in the past few months, according to specialist dairy valuer and auctioneer Gwilym Richards.

“A few herds have gone from farm to farm privately,” said Mr Richards. “More established, larger producers have been buying complete herds. Some flying herd operators have been doing this – big herds are getting bigger.”

Mr Richards said Market Drayton’s sale last week (15 March) saw third-quality heifers fall £300-£400 a head. Second-quality heifers eased by £200, and £2,500 is now the barrier for the best heifers.

“Better heifers have only dropped £100 or so, and some have not been affected much,” he added. “A lot of flying herds are milking three times a day, so a strong heifer giving 30-35kg and calved in the last three or four weeks is very much in demand.”

Feeling precarious

A strengthening in beef calf values, added to the cull value, means buyers only need to find another £300 to buy a good heifer, said Will Alexander, auctioneer at Bentham.

He said Bentham’s cull ring has seen feeding cows make 170p/kg liveweight or more and better dairy culls make 190p/kg liveweight.

Mr Alexander added: “One or two are worried that if the milk price comes back much further, there will be an influx of cast cows and that will challenge the barren cow price, which has helped underpin the dairy trade.”

He said he met the first resistance for three months at last week’s sale (15 March).