European milk production post quota still uncertain

The reaction of European dairy farmers to the removal of milk quotas this month is still uncertain, according to according the EU’s Milk Market Observatory (MMO).

It says the trend of falling milk prices in recent months appears to be stabilising and the floor is announced as having been reached in some Member States in Europe.

However, it also said following its most recent meeting it said that the future remains uncertain, notably with regard to production reaction after March 31, 2015 (milk quota expiry), as the recent slowdown is considered to be more related to looming Superlevy, and only to a lesser extent to lower milk prices.

In the latest draft short-term outlook prepared by the Commission, EU milk collection is expected to increase again from April 1, 2015 onwards, total year cumulating with a 1.2% increase compared to 2014.

It says the situation varies considerably from country to country, some of them recording both increased cow slaughtering and fewer heifers which would logically not lead to increased milk production in the short run, while others record fewer old cows but increased heifer numbers, hinting at production growth potential.

The MMO’s assessment of EU stock levels based on a residual approach (production + imports – consumption and exports) showed decreasing stocks for all dairy commodities in the last months of 2014 and the trend is expected to continue in January/February 2015.

It said quantities put under the Private Storage Aid (PSA) scheme in the last quarter of 2014 are assessed to have already found customers and not to weigh further on the market.

The MMO said the PSA extension is nevertheless considered as appropriate to help spread out upcoming peak production without endangering the current fragile recovery.

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