UK milk production has been hitting 20-year highs every month so far this year, new figures by AHDB Dairy shows.
It comes as much of the European Union's member states experience tightening milk supplies.
In the UK, milk yields were boosted by higher use of purchased feed, a mild start to the year and increased calvings.
For the first quarter of the year, cumulative production was 3.4% higher than last year.
However, the lack of grazing curtailed milk production through most of the 2018/19 milk year (Apr-Mar) leaving the overall rise in annual production at 1.1%.
Combined with higher than normal imports of dairy products in the first quarter of 2019 - a reaction to the threat of import tariffs – the higher production levels have put pressure on storage space.
Meanwhile, poor quality forage and a reduced dairy herd limited total milk deliveries across the 28 member states of the EU.
The knock-on effect on product availability helped to support prices on wholesale markets, in turn supporting prices paid to farmers.
While the UK has not experienced the same tightness in product availability, the inter-dependency of the UK and EU markets for dairy products has helped insulate prices on UK markets.
On average in the 2018/19 milk year, prices paid to farmers remained in the region of 29ppl, slightly above the 5-year average of 27.5ppl and continued to track trends in wholesale prices, with the normal 3-month lag.
Recent trends in wholesale markets have been downward, which has led to some cuts in farmgate prices in the first part of the year.
The current high level of milk deliveries in the UK is said to be leading to capacity issues for some dairy processors, causing some short-term balancing issues and potential longer-term storage issues.
Overall, the increase in production may put pressure on processor returns, in turn affecting milk prices.
