Spot milk price crashes as processors hit with oversupply

Surplus milk supplies have caused spot milk prices to plummet, with processors struggling to find a home for any excess milk.

Breakdowns at factories have left some sites reportedly giving away surplus milk for free to competitors as they have not been able to find a home for it.

Spot milk prices have fallen dramatically and have been quoted down at close to 20p/litre as milk supplies surge.

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However, global factors are still supporting wider dairy commodity markets, and many producers are still receiving a decent return for milk as a result.

This is encouraging dairy farmers to produce greater volumes where possible given the high milk-to-feed price ratio.

Dairy advisers told Farmers Weekly that the industry is in a difficult position, with excess milk volumes already a concern and still a further two weeks to go until the spring peak.

One adviser suggested it was a result of a major move to block calving, and the industry would have to shift more towards all-year-round production to maintain more consistent supplies.

Milk deliveries up 4%

UK daily milk deliveries are currently trending almost 4% higher on this time last year at roughly at 36.8m litres.

Annabel Twinberrow, an AHDB analyst, says milk production is up by 0.7% for the milk year, putting it on track to reach its highest volume since the 2020-21 milk year.

John Allen, managing partner at Kite Consulting, said: “I think this means we have got to have a call for incentivising level supply.

“There has to be greater incentives for levelling supply.”

He added that some processors may consider in the future, paying an additional 2-3p/litre for level supply plus or minus a tolerance, as well as a strong seasonality payment.