Arla and First Milk increasing milk prices

26-Sep-2016 - Last updated on 27-Sep-2016 at 10:33 GMT

First Milk and Arla Foods have both increased their milk price for October, with promises of more to come. Pic: ©iStock/Meinzahn

Related tags Milk price increase Cheese

UK company First Milk has announced a 2ppl (2.6 cents) milk price increase for October; its largest monthly increase since 2007. Meanwhile, Arla Foods is raising its milk price by two eurocents ($0.023) per kilogram from October 1.

First Milk says its milk prices will continue to rise in the coming months.

In a letter to members, chairman Clive Sharpe said, “Our view of the market outlook is positive as we see prices moving towards 25ppl ($0.32) in coming months.”

Following the increases, First Milk is now paying between 20ppl and 21.98ppl (25.9-28.5 cents), depending on the pool, and including, for some pools, a Tesco cheese group payment estimated at 0.98ppl (1.3 cents) for October.

European prices continue to firm

Arla Foods said that there is also a positive currency impact as a result of the new quarter’s average exchange rate being introduced to the pricing mechanism.

When the increase to the on-account price, and currency impact, are applied to the UK standard liter, the increase is 1.6 pence, taking the conventional price to 21.65 pence ($0.28).

Arla Foods board director, Johnnie Russell, said that commodity markets, as well as yellow cheese markets in Europe, are continuing to strengthen, and prices across European retail markets also continue to firm.

“Milk production in the EU continues to slow down, and we expect this trend to carry on over the coming months,” Russell said.