In September, AHDB Dairy launched a new milk price indicator termed “Forward Market Performance”, or FMP.  This is their market indicator which tracks the difference between current market prices and prices of the small amount of dairy product traded on futures contracts.   So these figures must be treated with great care.

FMP indicates that the trend of milk price is still upwards, with a predicted January price of 35.91€cents/litres, around 30.88ppl.  The conclusion is that demand for dairy product is likely to continue to outstrip supply over the next few months. Note that I have used an exchange rate of €1=86p in the table below.

There will come a time when the FMP predicts that the milk price rise has peaked.  We can be sure that it will then start falling again.  That is the nature of markets, particularly commodity markets. Prices rise and fall.  The annual average that you actually receive is what determines the “milk sales” heading in your annual accounts, not a heady peak or a disastrous trough.

Nevertheless it is heartening to see the optimism of dairying commentators and economists backed up by the rises over the next few months predicted by this indicator.