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Milk to Feed Price Ratio Continuing to Move Up

25 January 2017

AHDB

UK - Earlier this year, the milk to feed price ratio (MFPR) fell to its lowest level for a number of years at just 0.88.

However, since the end of the summer, the ratio has been steadily recovering. By November, the ratio had increased to 1.02 (up 0.14 compared with June), the first time it has exceeded 1 since 15 December.

Despite the rise, the ratio in November still remained below the 5-year average, which is currently sitting at 1.07.

With a number of processors announcing further price increases for the New Year, the ratio is expected to show further recovery.

Feed prices are continuing to rise, having lifted around 8 per cent between June and December.

UK grain prices have been supported by a tighter feed wheat balance as well as the weakness of Sterling.

However, this is currently being outstripped by rising milk prices.

At current feed prices (£250/tonne in January), in order for the ratio to move above the 5-year average, the GB farmgate milk price (excluding bonuses and aligned contracts) will need to reach 27ppl.

Note: The MFPR is not a replacement for analysis on the full cost of production, but gives an indication of the opportunities and pressures on farmers based purely on average milk prices and intensive animal feed.

At an individual farm level, the ratio will vary significantly depending on the type of feed used and the farmer’s milk price.

TheCattleSite News Desk



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