News Outlook
EU expects further decline in dairy herd
The lower milk supply in Europe is one of the drivers of the sharp rise in dairy prices in recent months. For now, a turnaround is not in sight. The European Commission expects a further shrinkage of the dairy herd this year. Brussels also expects that milk powder consumption will be slowed down by the high prices.
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In short term outlook for Agricultural Markets published this week, the European Commission expects the number of dairy cows to shrink by 2022% by 1. This continues the trend that started last year. Then the dairy herd shrunk by 1,5%, causing the European milk supply to stagnate for the first time since 2009.
The European Commission expects milk supply to shrink until the summer this year. There may be a cautious recovery later this year. Despite the relatively high milk prices, dairy farmers keep their foot off the accelerator. This is due to the sharp rise in feed and fertilizer prices, which means that the margin has barely improved.
Milk powder consumption may fall back
With regard to dairy consumption, Brussels expects that, despite the higher prices, butter and cheese consumption will continue to rise slowly. Milk powder consumption may drop. Milk powder is often used as an ingredient and it is possible that in some products the relatively expensive milk protein is replaced by cheaper alternatives. Brussels also expects the production of cheese and whey powder to be the most obvious, as this currently provides the best valorization of milk.