GB milk production for the 2023/24 season is forecast to reach 12.22 bn litres, 1.3% less than the previous milk year, according to our December forecast update.
This milk year is predicted to have been one of two halves, with the first half running ahead of last year’s production being driven by the higher prices seen at the end of 2022/beginning of 2023. This led to higher yields and a slowdown in the rate of cows leaving the herd. In addition, favourably wet weather through the majority of the summer led to high levels of forage availability keeping production ahead of last year.
This situation flipped in September as the lower milk prices and increasingly pinched margins, along with high levels of precipitation brought the long-anticipated declines in milk flows. September and October were -1.3% and -2.6% behind last year respectively. We are also now annualising against what was a fairly exceptional Autumn of milk production last year.
So far, November production has looked even less buoyant, with milk volumes down by 2.9% in the month-to-date.
So far, these reductions have been driven by yield reductions, rather than herd size as cow numbers have remained stable. However, until prices begin to recover/or input costs reduce significantly (and probably unrealistically) there will be little incentive for farmers to push cows. We could yet see herd reductions in the Winter which could further exacerbate production levels. Overall, our expectation is for tightening supply through until the next milk year. This could start to ease if prices begin to pull back.
Latest wholesale prices would indicate that milk prices could begin to move in a more positive direction in the first quarter of the new year, but the extent to which they might recover remains uncertain and much will depend on the recovery of global demand.
