Projected farmgate milk price changes

Updated 25 October 2024

These projections indicate the expected movements in farmgate milk prices for the next three months, based on movements in the dairy markets.

• UK wholesale prices saw declines for all products except cheese in October.
• Average prices for Butter and SMP fell by 3.4% and 2.8% respectively compared to the previous month. AMPE subsequently declined by 1.7p to 45.5ppl.
• However, MCVE recorded an increase month on month by 1.7p to 46.6ppl as prices for mild cheddar grew by 3.6%.
• These price changes overall resulted in the market value of milk (MMV) increasing 1.0p in October to 46.4ppl.
• Good demand amidst background of tight supplies is likely to support the firm tone of farmgate milk prices with further uplifts to continue for the next quarter.
• The market indicators have been updated to reflect returns based on cost data up to Q2 2024 and will be updated with Q3 2024 data in January 2025.

• The projected change is based on the strong link found between movements in the value returned to manufacturers from the market (MMV) and movements in farmgate milk prices.
• On average, it was found that a 1ppl change in the MMV will lead to around a 0.5ppl change in the overall GB average milk price, generally three months’ later.
• Differences will arise due to the markets in which milk buyers operate as well as the mechanism they use to set the milk price. These will impact the timing of price movements as well as the size of the change.
• Other factors which are likely to impact milk prices will be the degree of competition for milk in the market, changes to available processing capacity, import competition and contract negotiations.
• [1] The Milk Market Value (MMV) is a weighted average of AMPE and MCVE on a 20:80 basis. This was found to be the best predictor of movements in farmgate prices based on historical data. The analysis was done excluding prices paid on retailer-aligned contracts. The impact of the adjustment of AMPE and MCVE following the 2020 review has been accounted for, and the model updated.