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Drought loses out at higher milk price
Dutch dairy farmers managed to deliver slightly more milk in July than in June. The British have reported a small improvement in milk supply since 11 August. Is the damage from the drought not too bad, or is there another factor that minimizes the effects of the problems in forage extraction?
The British report on 11 August (after 11 weeks of red numbers) another cautious plus in milk supply. In the Netherlands, there was even a modest increase in July compared to June. If the UK trend is maintained, a further decline in supply becomes increasingly unlikely.
Less milk?
Where has the drought left its mark? The first hard figures come from Germany. The milk supply there in week 31 drops below the line of 2016 and 2017. It looks like this will remain so in week 32, and perhaps even in week 33. It is a minus of slightly more than 1%.
However, these minuses are not enough to negate the 30 weeks with a relatively high supply. The element of surprise in particular has caused a problem locally. At the same time, in many Northern European member states, more cows are indeed brought to slaughter (early).
That is something that also paid off until a few weeks ago, because of higher meat prices† In the last 3 weeks, however, prices have slowly fallen. On the other hand, there are still concerns about feed stocks, but they now seem to differ from farm to farm. A lot depends on the stocks that are still there. Sufficient alternative feeds are also available.
Dairy farmers want to milk
In the Netherlands, but also in other Member States, the combination of stocks, the damage and the supply of alternative feed creates a puzzle. This puzzle makes it difficult to determine in concrete terms how much less milk will be produced. At the same time, the dairy farmers want to supply more, because milk prices are picking up again. In the UK this is underlined by the demand for young cows that have just had a calf, bringing that price closer to the price of fresh heifers.
In the Netherlands too, the selection and improvement of the livestock seems to tackle the negatives in the milk supply. The demand for phosphate rights makes it clear that a further decline in livestock is not desirable. This trend could spill over to Germany at any moment. In June, milk prices (at 4% fat) were below the level of 2017, but still exceeded €30 per 100 kilos. DMK raised the price over July and Augustto better cover costs.
Higher milk price helps
All in all, it looks like the increases in the milk price will largely make up for the damage caused by the drought. What also helps is that the grassland is turning green again in many places. The months of December, January and February are going to be exciting, because that's when livestock costs the most to maintain. Milk prices usually also fall in the first months of 2019. Will there be fewer liters of milk in those months?
Herman van den Pol
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