Nine consecutive price rises at the Global Dairy Trade (GDT) auction, point a positive future for the industry with UK producers likely to benefit from increased prices for their milk and fresh heifers.

The last GDT sale, which saw a 15% increase in prices took all markets by surprise, with whole milk powder (WMP) rising a massive 21% to a seven-year high.

According to those in the know, the increased values are said to be the result of seasonally declining supplies in New Zealand, combined with growing demand from China.

Furthermore, difficulties in securing shipping containers, and good consumer demand, is fuelling concerns over food security, leading to the flurry in buying activity.

While the UK will not benefit directly from the higher WMP returns, they will encourage more milk to be directed into WMP leaving less available for other products. This will, in turn, provide support to the value of both fat and protein, pushing up prices of other dairy products.

And, as farm gate milk prices are essentially determined by returns available from the market, positive trends in global pricing will, in time, flow through into market-related farm gate prices.

Closer to home, producers are enjoying increased demand for milk and dairy products, with those selling locally in farm shops or on their doorstep via vending machines of bottled milk, yoghurt, or ice-cream witnessing an unprecedented growth in sales.

It was a point highlighted by Harrison and Hetherington dairy auctioneer, Glyn Lucas, who expects demand for milk and dairy animals to remain strong for at least the next 12 months.

"Production is always discouraged at this time of year when the processors are concerned as to whether they have the capacity to accommodate the spring flush, but it can't be too bad when one has has already increased the price it is paying for milk by almost a penny per litre," he said.

"There has been some disruption to trade as a result of Brexit, which combined with the Covid-19 pandemic and the amount of testing of lorry drivers has not been good for the industry, but prices for all dairy products have, in general, held up well."

Commenting on the value of dairy heifers he said that while prices usually slip in the first few months of the year, the March average for commercial heifers sold through Borderway Mart, Carlisle, was £182 per head up on 2020 figures and for more sold.

Pedigree heifers have nevertheless been averaging £2300 in the first couple of months of 2021.

More impressive is the fact that the December 2020 average of £2040 for commercial dairy heifers, which included no fewer than 57 animals selling at or above the £2000 mark, was a colossal £408 per head up on the 2019 sale when prices peaked at two grand – twice, to level at £1632.

With significantly reduced numbers of heifers being shipped in from The Netherlands and Holland now a net importer of such animals, Mr Lucas also expects the strong trade for dairy cattle to continue.

"There are more people looking to go into dairy farming and many of those who are already milking cows are looking to increase numbers, so there should be a good, sound demand for females for the remainder of the year," concluded Mr Lucas.

A crucial element in how prices develop over the spring flush will be the extent to which excess milk supplies, particularly in the form of bulk cream and skim concentrate, can find a home. Trade with the EU has become more costly (and in some cases unviable) under the new trading conditions. As a result, we may not be able to take full advantage of the rising global prices, and may find domestic prices fail to reflect the higher global values.

Look out for our assessment of what is expected over the peak, both in terms of milk deliveries and our processing capabilities off the back of the recent Milk Forecasting Forum.