Milk volumes in the UK are dropping fast

Milk volumes in the UK are dropping fast. The latest data shows that they are 4% down on last year. There may be worse to come, as the drought has had a major impact on forage and maize crops. Unlike last year, poor milk prices mean that most farmers do not have the cash to buy extra feed to compensate. There are growing concerns about next year’s volumes too, as cow fertility is reportedly poor on many farms due to heat stress, while bluetongue adds another concern. Processors know this and are increasingly worried about future milk volumes. Farmgate milk prices are rising rapidly, with two processors having increased their prices by 9p (€0.105, or 10.5 euro cents) in two months. That, combined with strong curd exports in recent months and balanced stock levels, means there is a growing divergence between EU and UK price expectations. This is particularly visible in cheese, where UK prices are racing ahead and leaving EU quotations, the EEX and futures prices well behind. Those prices are generally still on either side of £3,000 (€3,507) for mild cheddar, but UK prices are nearer £3,200 (€3,740) and climbing. Cheesemakers not trading cheeseSome traders expect prices to reach £3,400 (€3,974) in two weeks’ time and £3,800 (€4,442) by the end of the year, judging by some of the milk prices that have been announced. Two processors are on 40p (€0.468, or 46.8 euro cents) for October milk, and others are expected to follow soon. Many, if not most, cheesemakers in the UK are no longer trading cheese while the market is rising. They want to see how the market settles before releasing spare stock, and their milk supply is tight. Some processors are down 10% on last year, for example.In contrast, some EU traded prices are still below £3,000 (€3,507), while futures currently show bids for mild cheddar at around £3,150 (€3,682) for Q4 and offers at £3,250 (€3,799). Bids for Q2 next year are only at £3,275 (€3,828). The gap between those UK measures and futures is now the widest in recent years. If futures prices were to materialise in the UK, observers say, the milk situation would move beyond crisis point. As a result, buyers have little chance of securing British product at anything close to the levels traders are quoting for EU product, or where the futures market currently sits. Milk price expectationsThey may be able to secure Irish product at those levels for the time being. However, Ireland faces similar drought challenges, and farmers there will have similar milk price expectations. Some Irish manufacturers expect prices to start accelerating in perhaps a week to ten days. They are unlikely to sit back and let a £200+ (€234+) premium remain in play in their biggest market. By contrast, the wider EU market appears much calmer, or perhaps asleep at the wheel if Europe’s milk situation echoes the UK’s and the holiday period means traders have not yet woken up to it. If mild cheddar stocks are tight in the UK, the situation is even more difficult for mature and extra mature cheddar. Both are extremely scarce. Recent offers around £3,800 (€4,442) for mature cheddar have been withdrawn, with levels now nearer or above £4,000 (€4,676) where any seller can be persuaded to part with product. Extra mature cheddar is higher still. Mozzarella in the UK is also higher than EU prices due to the milk shortage. Manufacturers say it is around £3,300 (€3,858) to £3,350 (€3,916). In the EU, it is nearer £3,150 (€3,682). But, as with cheddar, manufacturers have currently pulled Q4 quotations while they assess where the market settles.Butter closer to EU levelsUnlike cheese, butter is much closer to EU levels and is around £3,500 (€4,091). Cream was more expensive than European prices for much of August, but is now on a par at £1.65/kg (€1.93/kg), or €4,800. It has been stable at that price for most of August, with the EU butter price and EU stocks preventing further increases. Spot milk is at 47p to 48p (€0.549 to €0.561, or 54.9 to 56.1 euro cents), and is again much higher than EU levels of about 42 euro cents. Cheesemakers are selling what spare milk they have because the financial benefits are obvious, and this will again tighten stocks going forward.Currency note: all GBP to EUR conversions use the interbank rate of £1 = €1.1689, quoted on 25 August 2026; figures are rounded for readability.