Why US milk production levels will outstrip European next year

Recent reports from the European Commission and the US Department of Agriculture suggest differing trends in milk deliveries between the EU and US, despite lower predicted dairy prices on both sides of the Atlantic.

In analysing the reports DairyCo says the European year-on-year increase in production is expected to slow to 1.6% from 2014 to 2015. In contrast, it says US production is expected to continue to rise, with a 3.3% increase predicted over the same period.

DairyCo says the increase in European production has been driven by a combination of strong milk prices in the earlier part of the year, preparation for the abolition of quota and a relatively plentiful supply of forage this year.

It says the current downward trend in cereal prices is likely to continue, which could support a further increase in milk production.

However, it says this is likely to be offset by the fact that some member states are still restricted by quota, which is expected to create a slowdown in deliveries in November and December, possibly to just below the level of last year.

DairyCo says in 2015 a smaller increase in production is anticipated due the expected drop in output with quota restrictions in the earlier part of the year and also as a result of lower predicted milk prices.

The observed increase in US milk deliveries has been a result of strong domestic demand and relatively high milk price in combination with lower feed costs, which look set to continue for the remainder of 2014.

DairyCo says production is likely to continue to increase in 2015, despite lower predicted milk prices, as a result of expected lower feed costs. It is also anticipated that the yield per cow is likely to increase, which could lead to even higher US deliveries in 2015.

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