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U.K dairy producers facing another cut
More bad news for British dairy farmers. One day after the Global Dairy Trade Index hit a five-year-low comes news at least two U.K. milk processors are going to cut farm milk prices further. First Milk announced they will cut its standard milk price by 1 pence to 21.7 pence per liter on January 1st. The manufacture-grade milk will be cut 1.1 pence to 22.9 ppl.
Dairy Quest says on January 3rd they will cut by 1.25 pence to 27.79 ppl and 25.79 ppl respectively. It is expected that other dairy processors will follow suit and this may not be the last cut.
While U.S. dairy prices had seemed immune to the declining global prices for most of 2014, the pressure has been building and domestic markets have been sliding. Class III futures are under $16 for February and March. Eric Meyer with HighGround Dairy says things are not going to turn around unless China starts buying again or Russia drops their embargo on western dairy products, global milk production needs to decline to come in-line with demand. Something he believes will not happen until the second quarter of 2015 at the earliest.
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