Dairy Market Insight
Based on the 30-day trend in the published price series.
34.38ppl is Defra's official UK average farmgate price for June 2026, the most recent monthly figure published (Defra publishes with a delay of roughly six weeks). It doesn't yet reflect any autumn impact from England and Wales' driest July on record. A faster-moving signal — wholesale bulk cream and spot milk prices tracked by independent consultancy milkprices.com — was already showing softening by mid-August 2026.
30-day trend
90-day trend
12-month trend
What's moving the market?
Facts
The UK average farmgate milk price fell from 46.0ppl (Jan 2025) to 40.0ppl (Dec 2025) to 34.38ppl (June 2026) (Defra milk price statistics notice). Separately, the severe UK drought has hit milk output directly: UK milk production fell by 18.5 million litres in July 2026 as farms struggled to feed and cool cows in the heat (Farmers Guide, Aug 2026), and reservoir storage stood at 65.9% of capacity in mid-August, 13.8 percentage points below the long-term average (gov.uk National Drought Group report, 7-13 Aug 2026).
Forecast
Two forces are pulling in different directions. The multi-year demand-side softness that has driven farmgate prices down would normally continue to weigh on prices. But the July production drop is a supply-side shock in the opposite direction — if it continues into August and September, reduced milk volumes could put a floor under further price falls, or even support a partial recovery. The June 2026 price above predates the fullest reported impact of the drought, so it is too early to say which effect dominates.
Facts and forecasts are shown separately. A forecast is never a certainty.
What to watch
- Current position
- 34.38ppl is Defra's official UK average farmgate price for June 2026, the most recent monthly figure published (Defra publishes with a delay of roughly six weeks). It doesn't yet reflect any autumn impact from England and Wales' driest July on record. A faster-moving signal — wholesale bulk cream and spot milk prices tracked by independent consultancy milkprices.com — was already showing softening by mid-August 2026.
- Key drivers
- Milk supply and demand balance, dairy commodity markets (butter/cheese/powder), processor contract terms, and the knock-on effect of England and Wales' driest July on record (Met Office) on autumn grass-based forage and herd condition.
- What industry sources are expecting
- Coverage of the drought has focused on the supply hit (heat stress, reduced grazing, feed shortages) rather than offering a specific price forecast; we have not seen a dairy-specific price forecast tied to the drought from a named analyst that we can confidently cite.
- CardiganBayAI outlook
- We would treat the drought as a genuine new factor to watch on milk prices, working against the recent downward trend rather than reinforcing it — but we do not yet have price data that reflects it, so this is a risk to watch, not something we are calling as a turning point.
This is CardiganBayAI's analysis, not financial or trading advice.
What's expected next?
- Confirmed
- Independent consultancy milkprices.com reported bulk cream (25tBSC) at £1.55–£1.65/kg ex works and spot milk at 40–48ppl delivered as of 16 August 2026, describing "a definite weakening in prices... in the last week." England had its driest July on record since 1836: 6.5mm of rain against a 65mm long-term average (10%), beating the previous 1911 record of 13.4mm. Wales had its driest July on record: 9.3mm against a 103.3mm long-term average (9%), beating the previous 1911 record of 22.6mm. Wales also had its sunniest calendar month on record (308 hours) and tied its joint-warmest July (17.8°C mean).
Recent developments
Wholesale bulk cream and spot milk prices soften in mid-August
Independent price consultancy milkprices.com reported bulk cream (25tBSC) trading between £1.55 and £1.65/kg ex works in mid-August 2026, describing "a definite weakening in prices... in the last week" as premium sellers struggled to hold previous levels. Spot milk was trading 40–48ppl delivered, and skimmed milk powder edged up to £2,395/t.
- Why it matters
- Wholesale dairy commodity prices tend to move ahead of the official monthly farmgate average — this softening is a signal worth watching for milk producers, even though it isn't in Defra's published price series yet.
- What could happen next
- If wholesale softening continues, it typically feeds through to farmgate price announcements over the following one to two months.
Sources & methodology
- Defra / gov.uk — UK Farmgate Milk Price Statistics — data as of 2026-06-30
- milkprices.com
CardiganBayAI analyses publicly available information from named sources above. We don't display information as current beyond what those sources have actually verified.