Cream halves in value with talk of flush excess milk at under 20ppl

Bulk Cream values continue to head South at an alarming rate and values are now at 50% of their peak compared to only 2 months ago in November when they topped at £2.80kg with this week trades at £1.35 to £1.40kg.  That’s a drop in cream value of 9ppl on every litre processed.

 

The next GDT Auction is not until 7^th February but with the last sale results converting to UK milk price of 30ppl and EU dairy prices lower than in the UK, its looking bleak.

 

There is little point detailing all the signs and drops.  In summary its very grim but shouldn’t be a surprise because the very clear warning signs have been there since the Autumn and have been flagged up regularly.

 

They say high milk prices cure high prices.  Well low milk prices will cure low prices at farmgate level.  It’s going to be painful but a big shake out must be imminent and that will eventually cure low below cost of production farmgate milk prices.  There is now talk that at peak flush surplus milk could trade for under 20ppl. 

Whether all involved accept it or not the harsh reality is farmgate milk prices went up too quickly and too high.

As one seasoned person stated to Ian this morning it’s like an elastic band – it shot up to 50p and now its pinging back and will likely over compensate before settling down.  Cuts of 1p and 2p for consecutive months won’t help but will simply be “death by a thousand cuts!”  Brutal big cuts in one or two hits to where it has to be will not be popular but it will result in a quicker stabilisation.  As at today most farmgate milk prices are artificially held up.  That’s certainly not helping the non-believers and the ostriches who have buried their heads in the sand, some of whom continue to buy replacements as if a 48-50p price is here to stay.