Meg Elliott on latest dairy market prices.
Many over the last fewmonths have beenexpecting the dairytrade to ease due tothe on-going reduction in the price for a litre of milkand no one can dispute that the honeymoon period of the fantastic 50sis well and truly over for now.
The truth is, is that although weare not heading into that 3,000bracket like we once were for bestheifers at their peak, trade for thefirst quarter of the year has remained solid with the best on aweekly basis well in excess of2,000.
Herd sales have also producedconsistently strong results.
To a certain extent the expecteddecline has also been counteractedby the weekly numbers forward offresh calvers which are noticeablyback in most areas of the country.
May, however, could be the monthto see a more definitive downturn,with many processors now droppingthe farmgate price for a fifth monthin a row, resulting in a massive 30per cent drop for some since the beginning of the year.
Industry figures suggest the costof production for a litre of milk isaround 40-45p, which means manyare currently running at a loss.
Thelast few weeks of trading is suggesting that this might be the case, withsecond and third qualities becomingharder to sell.
Underpinning all of this is the unprecedented cull cow trade whichironically has increased by almost30 per cent for dairy breeds fromthe beginning of the year, with prices regularly exceeding 190p/kg.
Best-fed dairy cows are seen to begrossing 1,700-2,000 nationally.
These are unprecedented timeswhere the exceptional cull cowtrade is coinciding with a dip intrade for the dairy cow which is nodoubt causing many still functionaldairy cows to head to the abattoir.
As there are no signs of the cullcow trade abating, this situation isonly likely to worsen in the interimwhich could have further negativeeffects on long-term dairy cow numbers and, consequently, productionlevels.
From a personal point of view,lets hope that the milk price recovers through the summer months.
While my job is to sell dairy cows,this instability will be forcing outthose who truly wish to stay in theindustry, resulting in an ever-diminishing circle.
While it is probably apipe dream to expect retailers andprocessors to recognise this, onewonders if they can afford not to.
Meg Elliott is an auctioneer andvaluer at Bagshaws LLP. Call01889 562 811, or email [email protected]