Milk production
GB milk deliveries through Q1 remained buoyant, reaching 1.0% up on the same quarter in 2024. January increased by 2.0%, March 2.7% and February by 1.2% when adjusted for annualising versus 2024’s leap year. We are now annualising versus 2024’s very wet Spring which brought subdued milk volumes. For 2025 so far, higher farmgate prices, creating a very favourable milk-to-feed-price ratio and a historically dry Spring have led to much greater milk flows.
The increase in March deliveries brings the GB estimate for the 2024/25 season to 12.44bn litres, a significant increase of 0.7% compared to the previous season and in-line with our forecast. This is the highest milk-year volume recorded since the 2020/21 season. The figures include the extra day from the leap year in 2024.
This is reflected in the latest milk forecast with the same positive factors expected to continue to play a role through the remainder of this year an dinto next, although we anticipate a slowdown in growth as we head through next winter. The anticipation is that the 2025/25 milk year will be up to 12,595 litres, a growth of 1.2% from the previous year.
Although the milk-to-feed-price ratio is at a 20-year high, there are downwards pressures coming from a contraction in the herd size according to the latest BCMS data and a decline in youngstock numbers with limited heifer replacement stocks due to the prevalence of BTV on the continent. Dairy calf registrations in Q4 were down to 314,000 head which was also the lowest on record. This could curtail expansion plans to some extent. There is further risk ahead depending on the spread of BTV. We have seen significant damage to milk flows in markets such as the Netherlands, Germany and France due to this disease and expectations are it will spread more widely in the UK as we head into midge season.
For the full 2024/25 milk season, GB organic milk deliveries are estimated to have totalled 352 million litres, this is down by 5.1% compared to 2024/25. This decline appears to have slowed through the year, flattening off by autumn and March deliveries actually grew by 7%. According to Nielsen, consumer demand for organic dairy is continuing to firm which highlights a need to boost organic milk supplies to match demand.
The GB milking herd totalled 1.62 million head as of January 2025, the lowest January number recorded, and a 0.9% decrease compared to the same month the previous year. The GB herd total came to 2.51 million head, a year-on-year decline of 1.4%. A fall was seen across all age groups, with the exception of the 4-6-year age bracket.
Culling of older cows helped to maintain the average age of a cow in the GB milking herd at 4.51 years, continuing the trend towards younger herds. Exceptional beef prices will have fuelled culling of older animals.
Births to dairy dams in Q4 2024 have totalled 314,000 head, according to the latest BCMS data. This is a decline of 46,000 head or 12.6% compared to the previous year and is the lowest figure seen in this period. Looking at the full year data for 2024, registrations were recorded at 1.48 million head. This was 36,300 (2.4%) head lower compared to 2023. Year on year increases recorded in Q1 and Q3 were dragged down by significant decline in Q4. This would indicate a change in the months of calving (reflective of a shift towards Autumn block).
Global milk production in January averaged 808 million litres per day, continuing the return to growth and now sits at 0.4% ahead year on year. Fortunes were mixed though with Argentina, the UK, New Zealand and the US seeing growth with other regions declining.
Milk deliveries in the EU are estimated to have declined by 0.3% year-on-year, to total 367.6 million litres per day. The largest volume declines took place in Germany and France, while increases were seen in Poland and Ireland. Some of the decline can be attributed to the spread of Bluetongue.
Looking forward, Rabobank predicts the momentum is expected to continue in all seven key exporting regions in 2025. For the coming year as a whole, milk supply growth of 0.8% is forecasted against 2024. Trade uncertainty caused by the imposition of Trump’s tariffs will significantly stir the waters, however. This is echoed by AHDB’s own estimate which is for growth of 0.6% globally.
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Wholesale markets
Overall price movements on UK wholesale markets softened through Q1 but prices bounced a little in March with some significant movements reported within the month, particularly for butter. Most commentators felt the market to be relatively quiet with some bated breath ahead of the flush. Whilst there is plenty of milk around, stocks are depleted, and many buyers are having to come back to the market ahead of when they might like.
Whilst milk supplies have been plentiful in the UK and Ireland there has been pressure on the continent due to the impact of BTV so the decrease in prices have been fairly minimal. Prices remain at very high levels. Bulk cream prices were flat, easing just £2/t, butter rallied by £150/t or 3%. Butter stocks were scanty with any excels Iris butter sent to the US ahead of incoming tariffs. SMP eased to £2010/t, declining by only £10/t in the last month. Cheddar grew by £60/t in the last month as availability was reported to be tight.
Reduced drying capacity for third party milk could cause some issues through the flush period and spot milk prices are already reported to be very low.
The GDT has reflected the Northern hemisphere trend of increased fat prices over the quarter.The overall direction has been generally positive.
As of March, milk market values (which is a general estimate on market returns and the current market value of milk based on UK wholesale price movements and typical milk utilisation) recovered slightly after the declines seen since November. AMPE grew slightly by 2% to 42.7ppl, MCVE grew by 2% to 44.1ppl. AMPE and MCVE remain significantly ahead of this time last year by 17% and 21% respectively.
Farmgate milk prices
The latest published farmgate price was for February, with a UK average of 46.1ppl. Latest announced farmgate prices were mixed for April.
Prices on retailer aligned milk contracts are holding steady to firm in some cases. Tesco and Co-op Dairy hold on to prices for the month. Sainsbury’s has announced a second consecutive month of price increase, with prices increasing by 1.88ppl for the month of April. M&S made a positive price announcement of 1.54ppl.
On non-aligned liquid contracts, milk prices have been broadly stable. Crediton Dairy continue to hold their price, meaning no change has been made since January 2025. Muller Direct has also held steady for the last six months. However, there was a slight decline of 0.3ppl by Pembrokeshire Creamery. Yew Tree held on to their milk price this month.
Some cheese contracts have given up some of the recent gains this month, whilst others held steady. Barbers cheese has announced a decline of 1.0ppl after a good uplift through 2024, Lactalis and Wensleydale also moved down by 0.9ppl and 0.25ppl this month. Conversely, Belton is holding steady with no price changes since November 2024. First Milk Manufacturing and Leprino food are also holding steady for the last five and six months respectively. Saputo and South Caernarfon Creameries also held on to their price this month.
Manufacturing contracts moved in tandem with Cheese contracts with a weakening tone. Arla Direct held on to their price for another consecutive month. Dale Farm GB and UK Arla Farmers Manufacturing announced a decline of 0.59ppl and 0.25 ppl respectively. Meadow announced a decline of 1.50ppl, making it the largest decline this month.
Demand
Dairy demand has been mixed, dependent on category. During the 52 weeks ending 22 March 2025, volumes of cow’s dairy declined by 0.5% year-on-year (NIQ Homescan POD, Total GB). Spend on cow’s dairy grew 2.0% year-on-year, driven by growth in average prices of 2.5%.
Cow’s milk volumes continue to decrease (-1.9%) year-on-year (NIQ, 52 w/e 22 March 2025) with a corresponding decline in spend of -3.2%, driven by a continued decline in frequency of purchase and volume purchased per trip. Declines were seen for both semi-skimmed and skimmed cow’s milk, while whole milk continued to see volume growth (+2.9%).
Cow’s cheese remains in volume growth, up 4.5% year-on-year, and spend increased by 2.8% despite average prices decreasing by 1.6% (NIQ, 52 w/e 22 March 2025). Cheddar, which represents 41.6% of all cow cheese volumes, saw a 5.8% increase in volumes. Almost all cow cheeses saw year-on-year volume growth except for British regionals and Stilton and British blue cheese that declined 1.2% and 0.2%, respectively.
Cow’s butter, at a total level, experienced a 2.5% decline in volume but a 2.9% increase in spending, which was driven by 6.1% decline in sales of butter spreads (NIQ, 52 w/e 22 March 2025). Block butter, however, continued to see volume increases of 6.8%. Plant-based spread volumes also continued to increase (+4.3%), potentially driven by lower average prices and an increase in promotional activity.
Cow’s yoghurt, yoghurt drinks and fromage frais volumes continue to grow (+6.1%), with spend increasing by 8.3% (NIQ, 52 w/e 22 March 2025). All products saw volume growth during the period, apart from fromage frais (-10.1%). Cow’s fat free yoghurt saw the greatest actual growth with an additional 10.6bn kilos purchased year-on-year (+7.2%), while cow’s standard plain yoghurt saw the fastest growth of 24.3% year-on-year.
Cow’s cream volumes grew by 1.4% year-on-year, driven by increased frequency of purchase and increased in volume per shop (NIQ, 52 w/e 22March 2025). Double and sour cream both experienced volume growth of 6.0%.
See the full data and these insights visualised on our GB household dairy purchases retail dashboard.
Chinese milk production is showing signs of slowing and there was optimism for domestic demand growth of 2% according to Rabobank. Lower supplies of milk are shifting trade dynamics for the largest dairy importing country in the world.
However, prospects for growth could be stymied by a Trump/China trade war with rapidly escalating tariff retaliations basically making trade between the US and China in dairy products uneconomic. The damage to the Chinese economy could also hold back Chinese demand for Western dairy products. The impact of this will be monitored closely.
Total export volume for 2024 was 1.22 Mn tonnes, a marginal decline of 3,900t (0.3%) from 2023. Exports to the EU picked up by 8800t (0.8%) so declines were driven by non-EU nations. Despite this, cheese and curd, whey, yogurt, milk and cream exports grew in 2024. Lower exports of powder by 37,500t (26.7%) and butter by 10,600t (19.5%) dragged down overall exports. In non-EU destinations, the biggest declines came from Bangladesh (-4900t), Nigeria (-2900t), Peru (-2500t), South Africa (-1500t), Saudi Arabia (-1500t) and Morocco (-1200t).
Cheese and curd continue to be the shining star in the export basket, with exports picking up by 17,700t (9.9%). This is followed by whey and whey products and yogurt at 12,600t (26.2%) and 8,000t (22.1%) respectively. Exports of cheese and curd has been increasing consecutively for the last three years. The more value-added dairy products like cheese boosted the export channel and supported domestic prices in the second half of 2024.
Cheese exports to the EU27 increased by 15,300t (11.1%) in 2024, recovering after a period of decline in 2023. Key gains in the EU27 were to the Netherlands, Germany, Ireland and Spain. This was capped by losses of exports to Belgium, one of our biggest destinations for British cheese. Globally, increases in tonnage also came from Algeria, the United Arab Emirates, the USA and the Czech Republic.
The ripples felt by the hand grenade of Trump’s tariffs on global trade will have repercussions for trade dynamics globally. AHDB will be assessing the impact of this as the situation unfolds.
