At long last renewed optimism in the dairy sector has not only resulted in improved prices for milking females, but also in-calf heifers and youngstock.

With production well down on the year due to poor summer weather hampering forage quality, and increased slaughterings, the spot price for milk has almost doubled since the middle of May, from 14-16p per litre to 25-29p at the end of July.

Such values are also running ahead of both the AMPE and MCVE at 23.4p and 23.5p per litre, respectively.

Add to that increased milk prices across the board, albeit only 2-3p per litre in some instances and confidence appears to have returned to the market.

“We saw a significant rise in the value of calved heifers at our recent pedigree dairy sale,” Glyn Lucas, dairy auctioneer with Harrison and Hetherington, told The Scottish Farmer.

“We had about 100 heifers forward and the average was £390 up on the month, with some in-calf heifers up to £500 per head up. Earlier in the year, in-calf heifers were averaging well below £1000 per head but that price is nearer £1500 now.”

Mr Lucas said the main reason for this dramatic price rise was the fact that large numbers of milking cows have been culled and never replaced and that the UK has been massively under producing in recent months.

He was also keen to point out that the increased demand for dairy cattle of all types, was coming from producers on some of the highest and surprisingly, the lowest milk contracts.

“There are virtually 15-20% fewer cows in most herds, so producers are looking to replace stock numbers when the demand for milk is on the up again. The problem is the numbers are not there to buy, which in turn is pushing up prices.”

It’s a similar situation further south too, where Wright-Manley dairy cattle auctioneer, Clive Norbury, who sells the majority of cattle at Beeston Auction Mart, said some producers have seen their milk price rise by 12-14p per litre, but even those receiving less less than 22p are buying milking females.

“The turnaround in the market has been remarkable. Everyone is looking to increase milk production. Our calved females will have risen £250-£300 per head on the month.

“We’re also seeing a lot more imported dairy cattle coming into the country again, even though it costs slightly more to bring them in compared to what it used to with the pound slipping in value against the euro,” he said.

“Trade for dairy cattle in Denmark, the Netherlands, France and even Germany is worse there, so it still costs far less to import them than what it would be to buy similar quality cattle in this country.”

Over the past year, Mr Norbury pointed out that Wright-Marshall had sold in excess of 6000 dairy cattle, a figure 20% up on the year as producers either looked to reduce numbers or disperse. However, he also said that there are now far fewer enquiries to sell up.

Backing up the auctioneers claims, figures from AHDB Dairy show increased cullings over the past year with the number of dairy female deaths for animals aged 30 months plus up 30,000 head in 2015 against the 2014 figure.

Deaths of these animals for the first half of 2016 have increased to just under 227,000 head too – the highest level seen in the past five years.

On average, since 2011, 48% of dairy cow deaths occurred in the first half of the year, which would indicate that deaths of these animals for 2016 as a whole could reach approximately 470,000 head if they continue at their current rate, which would point to a year-on-year increase of 11%.

Numbers could even exceed this figure as winter approaches, as producers weigh up the margins of retaining animals during this time when milk production costs tend to be at their highest.

Market fundamentals have nevertheless been described as a “dead cat bounce” scenario.

Wholesale prices for products such as butter SMP and cream saw increases in June of between £50 and £300 per tonne, compared to the previous month, and further price rises in July. This increase coincides with decreases in UK milk deliveries, with April and May production down more than 4% on the year, while deliveries for the two weeks ended July 16, were down 3.9m litres, or 10%.

Globally, however, milk production is slowing down at a far slower pace, as markets continue to be well supplied, hence any significant recovery in milk prices is likely to be delayed according to AHDB dairy.