February 25, 2010


UK milk prices to remain stable this year



A flurry of positive market conditions will set the stage for UK farmgate milk prices this year, allowing it to stabilise.


World milk supply is likely to drop this year, which will drive up commodity prices and boost UK prices as well, according to DairyCo's Datum Market Report.


World demand for dairy products is forecast to grow over the next decade as Russia, India and Asia increase their consumption. Consumption of dairy products goes up as incomes increase, so the rate of economic recovery in these regions will be key to any upward price movements, the report said.


On balance, the slowdown in global milk output, rising GDP and gradually shrinking stocks point towards improving price prospects on world dairy markets. If the dollar weakens, it will offset any rise in world prices for UK producers, but UK milk production and demand are both likely to remain static.


Overall, farmgate prices are likely to be relatively stable this year, the report concluded.