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Dairy Report

April 2022 Dairy & Bakery Report

Bread

We received a national price increase of bread partway through March but further increases are expected.

The Telegraph reports that British shoppers face paying 20p more for a loaf of bread because of a global shortage of wheat. As the Ukraine war sparks wheat shortage, the price of wheat hits a 14-year high.

Analysts and traders are concerned about the planting of this year’s spring crop, including wheat, corn and barley. The winter wheat planted during the European autumn may not be harvested in the summer.

Milk & Yoghurt

Farmgate milk price increases have continued through March and April, although there were fewer announcements than in the previous two months. Increases for March ranged from 0.25ppl to 3.0ppl and were applied pretty evenly to liquid and manufacturing contracts. This milk increase has had a direct increase for yoghurts and cheese.

Further announcements have also been made for April, including a 2.0ppl increase by Saputo, negotiated by DCD. Wyke Farms have increased its price by 1.81ppl, and Belton and Barbers have announced increases of 1.5ppl and 1.29ppl respectively. Other announced increases include 1.5ppl for Meadow Foods and Müller non-aligned suppliers, 1.0ppl for South Caernarfon Creameries and First Milk, and 0.5ppl for Crediton suppliers. There will be surely more to follow the above list.

With the Russian invasion of Ukraine, global natural gas and fertiliser prices will likely increase, but the scale of any increase is uncertain. The same is true for the impact of increased fertiliser and (partly indirectly) total energy prices on the cost of production on dairy farms. But, even without knowing exactly how post-invasion gas prices may develop, and the magnitude of any resulting increase in farm input cost, some conclusions can still be drawn.

Farm input costs may well increase faster and relatively more severely than dairy commodity prices and, therefore, raw milk prices.

Natural gas export volumes from Russia to the EU will, at least partly, be reduced due to pipelines through Ukraine being blocked. As a result, a sharp increase in global energy prices will mean dairy farm margins being hit directly, through rising on-farm energy and fertiliser costs.

Cream

Eggs

Egg feed has gone up to £340 per ton, from October when it was £200, this has increased the price of eggs. The feed is made up of Maize/wheat which is the main ingredient. The importers are talking the feed up to £500 per ton. All eggs have gone up in price and this is exacerbated by bird flu, with 1.5 Million birds being culled in the UK besides Europe.

Read more on Eggs in our April 2022 Buyers Choice.

Cheese

Cheddar prices have moved up, with supplies remaining tight, and demand for young cheeses still firm. More optimism in the foodservice sector, along with firm demand at retail have supported prices. Also facilitating higher cheese prices is the increased value of curd, providing good returns and limiting the amount of mild cheddar being made.

Butter

Butter prices saw a jump up again in February, as availability remained tight. High cream prices meant there was little demand from churners, as butter prices were insufficient to entice manufacturers to replenish stocks. This situation improved through the period as butter prices rose, and cream prices stabilised. Demand was said to be limited to buyers needing to cover short term needs, with resistance to longer-term deals, keeping trade thin. While butter prices were reported to have reached highs in the region of £5,000/tonne.