What a washout of a spring in virtually all parts of Scotland, England, Ireland and Wales.

According to David Keiley, a dairy consultant in the South, some recently turned-out graziers are 5litres per cow per day down this year compared to last year, at 24-25litres as opposed to 30litres a day. They are struggling to get the intakes, and I was advised not even to ask about the ground conditions!

It’s a similar picture across the UK – one of his colleagues in Devon told me he’d never seen the place so wet.

The Scottish Farmer: Dairy commentator Chris WalklandDairy commentator Chris Walkland (Image: web)

So far, though, the shocking weather has seemingly had little effect on milk volumes – probably because most cows are still tucked up nice and toasty inside – especially in Scotland. UK volumes are still consistently around 1%-1.5% below last year, and a similar percentage compared to the medium-term average.

Across Europe, the weather has generally been benign, and this, together with milk price increases in several of the big dairying states like Germany, France, The Netherlands and the UK, mean milk volumes have started to rise.

In fact in the UK there have been more price increases this year between January and April than in any other year apart from 2022.

The number of price rises announced by the main processors currently totals 39, compared to none in 2023; 10 in 2021; 12 in 2020; four in 2019, and one in 2018.

The Scottish Farmer: Wet FebruaryWet February (Image: web)

The best year prior to this one (excluding 2022 again) was 2017 with 35 increases. So far, prices have increased by an average of 1.7p, but to a maximum of 3.75p for Arla farmers (and 4.6p if December 2023’s rise is included.)

That said, its price was well down the milk price league table back then. Not now, though. The average non-aligned price, I reckon, is just under 37p on a standard 4%BF, 3.3%P basis.

On top of this we have also to factor in milk quality, which has been exceptional this year. High fat and protein percentages mean that many farmers are bagging a price of more than 40p.

There is though, an inevitable negative impact of all of these price rises, all over Europe: dairy buyers and traders (that’s those who buy from your processors, not your processors themselves) aren’t worried about milk supply!

They know that there will be plenty of product about for the next few months, and there’s no need to rush in and forward buy. Thus they adopt a hand-to-mouth buying strategy which can result in significant swings in market prices and sentiment.

Twinned with a volatile or negative Global Dairy Trade auction then they sit back even more! And that’s what we are currently seeing in the market place.

Butter is the one commodity currently swinging the most. In February, traders were short and drove the price up to more than €6000/t (£5100/t), but it is believed this is because they had contractual obligations to fill and had to pay through the nose for it. It wasn’t, alas, because end use demand had surged.

In the first week of March the price duly fell back to around €5700/t. However, UK prices are more robust than those on the continent, it seems, and prices here are bordering £5000/t.

Cream is stable at £2.05 to £2.10/kg, which is a good price for this time of year. I didn’t think it was good enough for liquid processors to move their prices for April, though, but happily for farmers they did, with Müller probably increasing because the gap between its directs and those in the aligned pools is too big for comfort.

In December 2022 it promised the gap would be narrower, and stay narrow. It didn’t. The other liquid processor then followed Müller’s lead.

Alas for those on ingredients contracts, such as the Yew Tree one, their farm gate price probably isn’t going to lift significantly unless SMP does. And there are no signs of it doing so. In fact it took a step back at the latest GDT auction, being down 5%. Arla’s SMP fetched the equivalent of around £2050/t, although manufacturers here say the market is perhaps £50 to £100 more.

The increase in the butter price may have boosted the farm gate price by a penny or so this month, but for a significant shift we could do with SMP increasing significantly. My calculations currently don’t put AMPE above 34p, for example.

In contrast to butter mild and mature cheddar is relatively stable at £3500/t and £3800/t respectively.

AHDB’s MCVE price represents the farm gate equivalent from current cheddar and whey prices, and it put that at 36.77p for February. But that’s a gross figure – a net figure would be 33-34p.

And it’s this that makes the recent price increases from the cheesemakers somewhat inexplicable – the moves on farm gate prices don’t relate to the (lack of) movement in the product’s prices!

I can only assume that contracted prices, as opposed to the spot prices cited above, have driven the increases.

All in all, and with the market what it is, I’m not sure I’d put too much of a bet on further farm gate increases in the short-term until the commodity prices rise. And that is probably not going to happen until after the flush situation becomes clearer.