European dairy markets are expected to become more balanced in 2017, providing more stability than has been seen over the past two years.
However, a robust export performance remains crucial. This is the general view to come out of this week’s Eucolait meeting, which provided an overview of milk production and demand expectations for manufactured dairy products.
AHDB Dairy has looked into the facts and performances of dairy markets around the world.
The levy board says global milk supplies are expected to remain below previous year levels in most of the key exporting nations in the first half of 2017, with the possibility of some growth in the second half of the year.
Higher prices are likely to stimulate increased milk production, but, in the EU, this could be limited by the requirement to reduce cow numbers to meet phosphate regulation targets in the Netherlands.
Supplies coming out of Oceania will be limited for the first half of the year, as they move into the trough period. This will be compounded by continued challenges around grazing, arising from unfavourable weather conditions.
EU production remains below previous year levels, although it is rising seasonally and the gap is closing. The US remains in growth, due to improving yields and stable margins.
Cheese production is expected to continue to grow at an EU level, and the weak Euro will help to maintain export sales. While growing per capita consumption in the domestic market will account for some of the growth, access to export markets will be crucial to keeping the market balanced.
Overall, strong export performance is a key determinant of stability in EU markets. As such, the impact of political instability, weak currencies, historically low oil prices and trade policy on demand from importing regions will play an important role in how markets develop.
