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• Milk deliveries recorded a sharper year-on-year decline.
• Seasonal production is forecast to fall by 0.9%.
• The dairy herd contracted by 2%.
• International milk production continued to grow.
• Domestic and imported dairy markets moved differently.

Milk availability in Great Britain weakened after heat, production controls and poor farm margins reduced deliveries. The latest monthly decline reached 3.1% year on year, following smaller contractions earlier in the quarter. Production for the upcoming milk season is forecast at 12.91 billion litres, 0.9% below the previous season.

The milking herd stood at 1.59 million head at the latest count, down 2%. The number of dairy producers was estimated at 6,850, a fall of 190 from the previous year. Farm exits gathered pace after milk prices weakened and producers faced forage shortages, fuel expenses and higher input costs. Fewer replacement heifers could place another constraint on future output.

International supply moved in the opposite direction. Combined milk production across selected exporting regions increased by 1.9%, with growth recorded in the United States, New Zealand, Australia, Argentina and much of the European Union. Greater international production pressured butter, cheese and milk-powder values before heat-related supply concerns provided some support.

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This creates different conditions for liquid milk and dairy commodity buyers. UK processors dependent on fresh domestic milk face tighter raw material supply and rising competition for farm volumes. Food manufacturers able to use imported butter, cheese or milk powder have a wider sourcing pool. Currency, freight, product specifications and minimum shelf life determine whether imported material offers a lower delivered cost.

Retail demand also varied by product. Liquid milk volumes declined, but whole milk continued to grow. Cheese volumes increased, supported by promotional sales, and yogurt volumes rose at a faster rate. The split means processors cannot rely on weak demand in one product to balance supply requirements elsewhere. Milk-solid allocation between liquid products, cheese, butter and powders will affect plant utilisation and contract availability.

Buyers should secure base volumes with suppliers that have stable farm relationships and clear collection capacity. Contracts can include volume bands instead of one fixed quantity, reducing penalties when milk intake changes. Food manufacturers should also verify whether quoted dairy prices reflect current milk values or older inventories.

Domestic supply pressure, export opportunities and higher farm inputs support a firmer negotiating position for producers. Processors that delay volume discussions risk paying more for short-notice milk or running plants below planned capacity.