European milk supply leaves a spring

In September, dairy processors in the Netherlands collected 1.089.028 tons of milk. This means that the milk supply is even below the 5-year average. Compared to the same month in 2017, there is a decline of 4,5%. Daily production in September is 36.300 tons, compared to 37.025 tons in August.

The decline in milk supply is partly due to the weather. Temperatures in September were slightly higher than normal. The shrinkage of livestock is the main reason for the declining milk supply. Between April 2017 and April 2018, the number of dairy cows in the Netherlands fell by 64.000 to 1,63 million, according to figures from Statistics Netherlands.

For the first 9 months of 2018, the Dutch milk supply amounted to 10,57 million tons. This means that the milk collection is 1,86% behind 2017.

Drought has an impact
In Germany, the milk supply from January to September amounts to 22,1 million tons. This is 2,9% above last year's level. In August, German processors collected 2,7 million tons, an increase of 0,5% compared to 2017. What is striking is that the milk supply for August suddenly shows a much smaller increase compared to the previous months.

The German milk supply for September is not yet known. It is quite possible that the milk supply will be below last year's level for the first time this year; the provisional weekly figures show a decline of up to 1% since the first week of September. This decline is probably related to the prolonged drought this summer, which resulted in more dairy cows being needed the slaughter have been brought.

Shrinkage in France
The French milk supply for August amounts to 1,91 million tons. This is a decrease of 1,2% compared to a year earlier. In July, the milk collection was still 0,6% above the 2017 level. This shows that the French milk supply is declining. All the more so because the weekly supply in September is even less than 3,5% below last year's level. Here too, the drought is probably the cause of the shrinkage.

In Italy, the milk supply for August is also below the 2017 level for the first time this year. In Poland, the supply remains ahead of last year, although the increase in August is less significant.

Supporting effect? 
The declining milk supply in Europe can have a supporting effect on the dairy market. There has been considerable price pressure in recent weeks milk fat (butter and cream). The German cheese price is currently maintaining a high level, but there are doubts in the market as to whether this price can be maintained. Typically, the cheese price shows a significant decline in the fourth quarter.

A less ample milk supply in Europe could put a floor on the milk fat and could also reduce the pressure on the cheese price. The coming weeks will reveal how dairy prices will respond to the tighter milk supply.