DairyCo

The start of 2012 is continuing in a similar vain to the way 2011 ended.  Milk supply is continuing to increase with December UK deliveries standing at 1,095m litres, 23m litres (2.2%) more than the previous year.  In addition, GB milk production is now increasing with December deliveries up 1.5% compared to the previous year.

As with World and European markets, UK prices are showing a definite split between the market for fat and the market for powder.  The weakening of the euro against sterling caused some pressure from imports although the situation remains changeable.  While butter has weakened again, as it has in Europe, there are some suggestions that the situation may become easier when applications for putting stock into private storage aid (PSA) begin in February. 

With the market for butter under pressure, cream has also seen a fall in prices.  Prices have been falling heavily since Christmas and although there was some stabilisation, the market is still fragile.  There is some hope that demand from the continent may pick up and any butter going into PSA would help the situation further.

Powder markets look to be a lot more stable and although prices have eased slightly, UK movements are similar to the continent where prices have flattened.

Cheddar prices continue to remain flat with returns from whey powder also stable.  As a result of this, and the weakening of other markets; some industry commentators expect that milk could be shifted into cheese production in the future.  However, it is still too early to tell at this stage.