EU bullish on latest short-term dairy outlook

Boosted economic growth and covid-19 vaccination campaigns have had a positive impact on the short-term outlook for the dairy industry in the EU.

The economic recovery in the EU is underway, and it is stronger than previously predicted. At the same time, real EU GDP is expected to grow by 4.6% in 2021 compared to the same period last year. The reopening of catering and the easing of travel restrictions in the EU, helped by progress in vaccination, will have a positive impact on food consumption in the EU as a whole.

Growth in MILK production this year started slowly due to cold weather, although the figures were different: in Germany and France in January-April, production volumes fell by more than 2%, while in Ireland they grew by more than 8%. In 2021, total production is projected to grow by 0.8% compared to the previous year. Wholesale prices in the EU have generally been on the rise throughout the year. This is expected to support milk purchase prices and partly offset feed price increases.

In January-April, cheese production grew more actively than butter, it amounted to 3%. Butter production decreased during this period, but it is expected that in general for 2021, butter production will increase by 1%, and cheese - by 0.8%.

EXPORT demand, especially from CHINA , is supporting the EU milk powder market. An increase in the production of dry whey, SMP and WMS is expected. In the case of COM, it is predicted that in 2021, the growth in demand may lead to a slight reduction in private stocks. Whey production was supported in the first quarter by strong demand in China and an increase in cheese production, which is expected to slow down over the rest of the year. Overall, however, whey production growth is expected to continue.

The outlook for EU dairy markets in 2021 looks quite optimistic, showing a recovery after 2020. However, uncertainty and economic risks will remain as long as the pandemic persists.

PioneerProduct based on AHDB materials