EU-28 Milk Production Update – Jun ’15
According to Eurostat, Apr ’15 EU-28 milk production increased YOY for the first time in four months, finishing 1.9% above the previous year. The increase in production corresponded with the expiration of the EU-28 milk production quota system at the end of Mar ’15. Monthly production growth had decelerated throughout the previous six months as over-quota producers attempted to limit superlevy penalties for exceeding milk production quota levels. YOY increases in production were led by Italy (+84,690 MT), followed by Ireland (+80,870 MT), Poland (+36,400 MT) and Austria (+26,590 MT). YOY declines in production continue to be led by Germany (-36,770 MT) and France (-22,310 MT), although the magnitude of the declines was significantly less than previous months. Production growth remained strong throughout the first three quarters of 2014 due to high milk prices, favorable weather, expanding dairy herds and more than adequate feed and forage supplies. More recently, lower farmgate milk prices, the Russian ban on EU dairy exports, and the likelihood of superlevy penalties resulted in decelerating milk production. Culling rates have increased in Europe as many producers culled their lower producing cows in the final months leading up to the quota expiration, however the recent uptick in culling may be short lived in the post-quota environment. Continued growth in milk production throughout the ’15-’16 production season is expected, however the current margin environment and ongoing Russian import ban may mitigate production gains in the near-term.