It might not last long, but for once, there is an air of optimism in the industry with beef, sheep, pig and even milk prices on the increase and likely to continue heading upwards.

The Covid-19 pandemic may not have been the best thing for the general economy or people’s mental health, but it has bolstered agricultural commodity prices as consumers look to buy local.

While there have been a few wobbles in all sectors, the dairy sector probably looks more fruitful than most long-term, according to industry commentator, Chris Walkland, who believes the market is the most positive it has been in weeks.

Speaking at last week’s highly successful Gold Cup Open Day at the Sloan family’s Darnlaw Farm, Cumnock, he told attendees that the spot price is well over 30p per litre and with supplies down on the year, has potential to rise further.

Despite the Global Dairy Trade slipping slightly again at its last sale, many EU commodities have posted gains for the first time in several weeks.

“All of the official quotations from Germany, the Netherlands and French for whole milk powder (WMP) and skimmed milk powder (SMP) were up. More significantly perhaps, Dutch butter prices have increased for the first time in seven weeks – breaking a run of losses,” he said.

From a farmgate point of view, Mr Walkland said it means that prices were turning back towards 28p per litre, having dropped to nearer 27p, which had to be good news for the industry.

The futures have also been showing some signs of positivity. “EU butter futures have improved for the past two consecutive weeks. Prices are all more than €3950 now and closing in on €4000 – that’s a key milestone and it’s there for January. They were all well below €3900 for mid-July,” said Mr Walkland.

He added that SMP futures were up for the past three weeks on the trot, with prices from September through to March all sitting above €2500 again, compared to below it at the end of July.

Adding to these positive shoots, were the latest figures on UK milk volumes, which are dropping off faster than previous years and must be of concern to traders going forward, he said.

Latest figures show volumes are 12.5% lower than those in the peak week. Normally, volumes would be less than 10% lower, but an extra 2.5% is a lot of milk. As it is, GB milk volumes over the past two weeks have been down 2.7% on the year, with UK volumes down 1.75%.

It’s a similar situation on the continent too, with German and French volumes down below both 2019 and 2020 levels for the first time since February and March.

“The US is also tracking less than it was and Fonterra is warning that volumes in New Zealand, will be nothing special compared to previous years,” added Mr Walkland.

Chris Goodham, head of dairy and livestock at AHDB, said the heatwave across the GB came to an end on July 24, which, coupled with the cooler weather and rain that swept across the country, resulted in daily milk collections falling further.

As a result, he said, GB milk production in July was provisionally estimated to have come out at 1030m litres – 2.1% below last year and 1.5% below the forecast. Volumes continue to run in line with 2018.

GB organic milk deliveries recorded a similar pattern to the overall volumes. July was estimated at 39m litres – 2.6% below July, 2020.

However, having started July above last year, the rapid decline saw volumes sit more than 4% down by July 27, with totals now estimated to be around 1.7% down compared with the same time last year.

He said that production was expected to remain under pressure. Add in high bought-in feed costs, variable silage quality and high cull cow prices, and there was further potential for lower production later in the year.