Arla has announced it will maintain its farmgate milk price at 33.98p per litre for a standard manufacturing litre in March, following six consecutive months of price reductions. The decision reflects early signs of stabilisation in global dairy commodity markets, even as supply pressures persist across Europe.
Arla said international market indicators suggest improving sentiment. However, it cautioned that high milk availability across key European producing regions continues to weigh on pricing fundamentals.
Organic Sector Faces Continued Uncertainty
The cooperative will also hold its organic milk price at 57.98p per litre. Despite price stability, Arla noted that the organic dairy segment remains under pressure. Weakening consumer demand and declining sales volumes are impacting profitability, raising concerns about the medium-term outlook for organic producers.
Supply Growth Remains a Key Challenge
In the UK, milk output continues to rise. GB milk deliveries exceeded 35 million litres per day in late February, running 4.2% above the same period last year. With production expected to increase further towards the spring flush, market balance remains fragile.
Although improvements in global dairy markets have eased some industry concerns, ongoing oversupply continues to create challenging trading conditions for processors and farmers alike.
Market Indicators and Commodity Trends
Key milk price indicators have shown modest improvement. The actual milk price equivalent (Ampe) rose by 2.7p per litre in February to 32.8p per litre, while the milk for cheese value equivalent (MCVE) edged up to 32.7p per litre.
Wholesale prices for dairy commodities, including cream, butter and cheddar, have also started to recover. Nevertheless, prices remain significantly below year-earlier levels, indicating that the recovery is still tentative.
Outlook
While Arla’s decision to hold prices offers short-term relief, the balance between rising milk volumes and gradually improving demand will remain critical in determining price direction in the months ahead.
