EU short term outlook for dairy

Published 18 July 19

Rabobank’s latest EU short term outlook suggests:

  • EU milk production will grow 1% in 2019.
  • Supported by sustained demand for EU dairy products and favourable weather conditions
  • Global SMP demand is high with public stocks now empty and private stocks expected to be back to low levels by the end of the year.
  • Higher domestic use of dairy products, mainly cheese, could grow further during 2019.  

EU short term outlook 1

The world economy is anticipated to continue slowing down during summer and autumn 2019. General uncertainty remains high and market confidence is affected by the trade frictions between the US and its main trading partners.

According to Rabobank:

Milk production   Improved availability and quality of grass should provide good pasture conditions and allow forage reserves to be built and support EU milk production.
SMP  Despite the full disposal of intervention SMP stocks onto the market and an anticipated drop in private stocks, sustained demand both domestically and globally is expected to support SMP production growth in 2019.
Butter  The EU is expected to become more competitive on the global market due to the decreasing price of  butter, exports are forecast to decrease and domestic use is expected to rise
WMP Despite an overall increase in demand for WMP, EU production has fallen in the first four months of 2019. China increased imports by 33%, but only 1% came from the EU. Some market opportunities should be opened up by the seasonal decline in New Zealand’s milk production, but, for the full year exports are forecast to decline 15% and production 5%.
Cheese  Export growth of 3% was recorded for cheese for the first four months of 2019, driven predominantly by increases in shipments to the top three markets; the US, Japan and Switzerland. A 1% increase in cheese production is anticipated, driven by higher domestic and export demand.

Overall, there’s an increased domestic use of dairy products, mainly driven by cheese and this could grow further in 2019, by 0.5%.

EU short term outlook 2

* Please note the EU outlook assumes that the UK is still a member of the EU-28, as it is a member at the time of publication

Jennie Tanner