The U.S. Dairy Exporter Blog: Market Analysis, Research & News

  • (Interactive Graphic) Slowing EU Milk Production Drives Price Rally

    By Alan Levitt August 29, 2016

    USDEC sees more balanced markets by 2017. An interactive graphic shows the slide of EU-28 production, which will remain a key factor.

    Global markets rallied in August, with prices up 25-30 percent. The main driver was the long-awaited slowdown in supply growth from the European Union, which brought worried buyers off the sidelines, according to USDEC’s latest issue of Global Dairy Market Outlook

    Click here to get and print the 14-page PDF of Global Dairy Market Outlook, USDEC's take on global dairy trade, international market drivers and U.S. performance. 

    EU milk deliveries were up 6 percent in in Q1, but growth slowed in April and May. In June, they were down 1.9 percent—a decline of 260,000 tons vs. the prior year. Similar losses are reported for July. Increased culling, less supplemental feeding and poor weather have contributed to the downturn.

    Deliveries in Ireland and the Netherlands were up nearly 5 percent in June. But they were the outliers. Output in Germany (-1.5 percent), France (-3.3 percent), the UK (-7.2 percent) and Poland (-2.2 percent) was lower. 

    The reduction in EU-28 milk production can be seen in the interactive graphics below. Click on the trend lines or drop-down menus to get specific production data at a point in time or on other major exporters, including the United States and New Zealand. 

    In light of recovering markets, co-ops and processors have started to raise their payout prices to farmers, which could stall further contraction. However, we look for production in the EU to be down 1-2 percent in the second half of the year. This will cut into the global surplus further, setting the stage for more balanced markets in 2017.

    marketdatastockphoto1-141312-edited-177212-edited.jpgWhile both the details and efficacy of the EU’s voluntary supply-management program remain unclear, in Q4 it may contribute to ongoing contraction there. In addition, growth on top of last year’s 4-percent gain in the EU in H2 will be very difficult. In H2-15, Irish and Dutch milk production was up 20 percent and 12 percent, respectively—rates that will not be repeated.

    Editor's note: The interactive charts above work best on a PC and may not render properly on a mobile device. Also, the numbers in the charts change automatically as new data come in. You can access all of the latest trade flow charts on usdec.org. The analysis on this page is based on available data on August 29. 

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  

    Research & Data Market Conditions
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