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Tuesday 20 November 2018

EU milk prices show increase for the first time since December

German Chancellor Angela Merkel is welcomed by the farmer Ursula Trede during her visit at a dairy farm in Nienborstel, Germany July 19, 2018. REUTERS/Fabian Bimmer
German Chancellor Angela Merkel is welcomed by the farmer Ursula Trede during her visit at a dairy farm in Nienborstel, Germany July 19, 2018. REUTERS/Fabian Bimmer
Ciaran Moran

Ciaran Moran

EU average farm gate milk price increased by 1.0pc in June 2018 to 32.37 c/kg; this is the first upward move after consecutive decreases since December 2017.

Due to unfavourable weather conditions, the expected increase in EU milk production this year has been lower than anticipated.

This could lead to higher milk prices in the 2nd half of 2018, according to a latest outlook by the European Commission

In the first quarter of 2018, EU milk collection was more than 2pc higher than last year.

Despite the large dairy herd, production growth was slightly less than expected. The main reasons were the cold and wet weather conditions delaying grass growth in early spring, followed by a lack of precipitation in some Member States.

At the peak of the milk season (April-June), the availability and quality of pastures is key not only for providing good pasture but also for building up forage resources for the following months.

After a late start, grass productivity in France is now back to normal in the main milk producing regions. Ireland and the UK, are still catching up in this respect.

In addition, Denmark, and wider areas around the Baltic Sea are now affected by relatively higher seasonal temperatures and a lack of precipitation.

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On the other hand, farmers were able to use more feed concentrates thanks to higher margins at the end of 2017 and the expected higher milk price in the second half of the year, thus partly compensating for lower forage availability.

Ireland, and to some extent also France, were most affected, the Commission said.

In addition, milk collection in the Netherlands is down from last year, as constraints on phosphate emissions phased in.

By contrast, collections went up significantly in Germany, Italy, Poland, Spain and Belgium in the first 4 months of the year.

The increased collections in the EU, but also globally, as we approached the peak of the season, led to a drop in the EU raw milk price to around EUR 33/100kg in April.

This was 2pc below the previous year’s price and 1pc lower than the last 5-year average.

According to the outlook, the EU milk price is expected to increase later this year. This follows the seasonal pattern and the current rise in dairy product prices, driven by EU and global demand.

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