Muller’s standard litre price will remain at 26.69ppl in March
Muller has confirmed its milk price will be unchanged in March. The standard litre price 26.69ppl following five consecutive months of increases.
It came as analysts warned farmers not to expect increases after February as spot markets had ’peaked’.
In a letter to farmers, interim agriculture director Rob Hutchinson cited increasing supply volumes and commodity markets ’easing back’.
He said production was above last year in all its milk field areas and it was important to closely monitor the balance of supply and demand as the ‘spring peak’ approached.
“Our milk price position for March has been discussed with the farmer Board and reflects the current environment where dairy commodity markets are easing back.
"In addition we are seeing increasing direct supply volumes across all our milk field areas. As we approach the period leading into the spring ‘peak’ it is important that we closely monitor the balance of supply and demand.”
NFU dairy board chair Michael Oakes said: “Although we would clearly like to see steady growth, indicators show that the dairy market is still fragile.
"AMPE and MCVE indicators have been relatively stable since October, with an AMPE drop for January," he said.
"However, milk prices are still far from sustainable and we need a significant period of recovery and stability before farmers will be able to recoup any losses. It is important that the supply chain recognises this.
"Although milk production appears to be slowly increasing, latest figures show that production is still lower than it was last year.
He called for mandatory price reporting to help farmers deal with supply and demand.
He added: "We are surprised that Muller has not announced a forecast retail premium for March, which they have historically always done and which gives farmers more certainty of price."
In Farmers Guardian on Friday (February 3) industry analyst and Dairy Farmer columnist Ian Potter warned farmers to ‘get out of the mindset’ of increasing production when prices rise as it would cause a bigger crash when prices fall back down.
He said further milk price rises would be an 'unmitigated disaster' for dairy farmers as farmers would push for more milk.
He encouraged farmers to ‘act responsibly’ and speak to their buyer before increasing production.
Dairy analyst Chris Walkland said he ‘did not have any hopes’ for increases in March.
“I would hope that they stay the same," Mr Walkland said.
“If they were to go down, I think it would be a disaster. It would destroy farmer morale.
“I am optimistic prices will remain at the high 20s but not that they will hit 30. If they did hit 30, the market would overheat.”