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USDEC holds bullish outlook on EU milk production

Mary Ellen Shoup

By Mary Ellen Shoup+

24-May-2017
Last updated on 25-May-2017 at 10:11 GMT2017-05-25T10:11:29Z

EU milk production is forecast to continue its recovery throughout the year.  ©iStock/yadamons
EU milk production is forecast to continue its recovery throughout the year. ©iStock/yadamons

The EU reported its first increase in milk production in nearly a year aided by the rising European milk prices and the USDEC expects the trend to continue. 

The increase equaled 3,000 tons, technically a less than a 1% increase from milk production levels last March, but USDEC predicts that the recent growth will likely continue for the rest of the year.

Results varied by country, but EU members that had been lagging showed significant improvement for the first three months of 2017.

Country role reversal

According to USDEC data, the EU rebound is being led by Poland and Ireland with first quarter output rising 3.5% and 1.1%, respectively, with the largest increase occurring between February and March for the quarter. USDEC forecasts that Poland and Belgium are on track for peak production later in 2017.

Spain and Italy also posted production gains in March and the UK has been approaching a breakeven point.

“Even the Netherlands, a big contributor to overall EU milk gains the past two years, eked out a bump in March deliveries, despite moves to start implementing a phosphate reduction mandate that includes a significant dairy cow cull,” USDEC said.

Germany and France (the largest EU milk producers) saw 2% and 1% declines in milk output for the first three months of the year, a trend that will likely continue due to the wintry, wet weather that affected the region through mid-May, according to USDEC.

“We are, in fact, more bullish on EU milk production than current European Commission forecasts of a 0.6% increase for the year,” USDEC said.

“We look for better than 2% growth in the second half—a year-over-year increase of nearly 300,000 tons of milk per month—bringing the 2017 total to a 1% gain.”

How does the US compare?

When comparing EU milk production to the US, output sits at around 1% less for Q1 2017, compared to the same period last year.

US dairy exports experienced significant gains of 14% by volume for Q1 2017, the highest first quarter results since 2014. USDEC predicts that the US will lift its total exports from 15% to 20% of the total US milk supply, largely driven by strong demand for cheese in Asia, Mexico, and the Middle East.

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