Dutch dairy company Friesland Campina has increased its milk price for February.
The cooperative said the rise of €1.25/100kg (equivalent to 0.9ppl) was the result of improved prices for butter, milk powders and foil cheeses. In addition, export prospects have been improved by the weak Euro. Provided price increases continue, we would expect there to be a knock-on effect on UK markets.
Dairy farmers in the Netherlands have seen milk prices fall by around one third over the past year, the largest drop of the main milk producing countries in Europe, resulting from its high level of exposure to global markets. The recent improvements in commodity markets, as witnessed from recent GDT results, now seem to be feeding through to Dutch farmgate prices.
Although the UK is less directly impacted by global markets, our domestic wholesale markets tend to follow trends in the EU. The next Fonterra dairy auction takes place on 3 March and will help shed light on whether the markets have turned a corner or the price uplift is temporary.
