UNITED Milk has raised its milk price to 15p a standard litre (4.1pc butterfat and 3.3pc protein) effective from August 1 - a 1ppl rise over July.

This is the first upward move from United Milk since the spring and reflects better performance in the company's new factory at Westbury, Wiltshire, and the first signs that dairy product markets may be firming.

The price is net of all transport and seasonality.

"This is an improvement but we acknowledge there is a long way to go before our suppliers will be back in real profit," said Don Morris, chief executive.

In a letter to suppliers, Mr Morris also reported that technical performance at the £45m processing dairy at Westbury was improving and output rising.

"And, despite the technical problems at Westbury, sales performance is building positively. More than 4,500 tonnes of skim milk powder, 1,300 tonnes of cream and 500 tonnes of butter have been sold spot and forward," he said.

There are signs that prices could continue to firm. Sales into intervention in the last tender on August 27 were 4,196 tonnes, for which 95.5pc of full intervention was paid.

European prices for butter and SMP continue to firm with exports increased and production affected by the bad weather in central Europe.