Inside Milk
German milk production dips below 5-year average
The milk supply in Germany has lost considerable ground in June. What does it mean that the largest dairy producer in Europe is drinking less milk?
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After the peak of milk supply in Germany in May (compared to 2018) was already lower, production in June shows a further decline. The milk collection for this month amounts to 2,709 million tons. This is 2,3% less than in 2018. Supply is below the 2-year average for the first time in 5 years.
Such a large decline has an impact on the European dairy market, as Germany is the largest producer. This decline did not come out of the blue, however. First of all, the shrinking dairy herd to blame for this. In addition, temperatures rose high in the second half of June, which slows down milk production. Another reason is the drought, which is particularly affecting dairy farmers in the eastern and southern states.
Spot market responds
The fact that the availability of raw milk is under pressure is also reflected in the spot prices of raw milk. The DCA spot milk quotation in southern Germany peaked at €39,50 per 100 kilos (at 3,7% fat) at the beginning of July. However, this quotation has now fallen again, although the prices of spot milk in Germany are still slightly above the payment prices.
De raw material value of (German) milk is also under pressure; mainly as a result of falling butter prices. The payment prices that German dairy farmers receive have not yet responded to this. The lower supply figures offer the prospect of providing counter pressure to the ailing butter price; especially because Germany also had less milk in July, although the final figures are not yet available.
France and Italy
In France, milk supplies in June are, remarkably enough, just above the 2018 level. This is actually the first time this year. French processors collected 2,032 million tons in June. This was 0,25% above last year's level, but 0,5% below the 5-year average.
The warmest temperature ever recorded was recorded in the south of France towards the end of June. However, the French dairy sector is mainly concentrated in the north, where weather conditions were less extreme.
Just like in France, Italian production is also ahead of last year. Italian processors collected 1,008 million tons in June. This is 0,8% above the level in 2018 and even 5% above the 5-year average. These figures imply that the milk supply is growing less rapidly than in previous years.