EU Farm CowMilk Pay Prices Have Fallen Amid Increasing Cow Milk Production
April is the start of the new 2023-24 season but so far, the northern parts of Europe and the British Isles have seen colder snaps which are not perfect conditions for dairy cows. The good news is, going into April, mild temperatures at a little over 10 degrees Celsius should prevail which would auger well for milk production. Another price influencing factor towards the end of the season is the March Global dairy Trade auction which registered a fall in prices. The GDT index traded down 0.7% with an average selling price of $3403. This also gives an indication milk prices are in a bearish territory now but a reported decrease in input cost has been the reason why farmers are not feeling the immediate effect of the fall in farm-gate prices.
Since the beginning of Q3-22, countries along the north-western parts of Europe have reported increasing cow milk collection numbers. Even Though numbers from other countries were negative, the cumulative EU collection number for the last quarter was positive: cumulative collection from September to December was up 1% YoY to 34.3 million mt.
In October, according to data from the CLAL, EU27 milk collection was 11.67 million mt up 100 thousand mt on the same point last year. Collection in November 2022 was well above last year at 11.17 million mt up 202 thousand mt YoY. EU milk collections ended the calendar year 2022 with 11.48 million mt for December also 131 thousand mt up on the same month in the previous year.
These fundamentals have helped to keep the milk price down owing to most EU countries seeing increased milk collection volumes. The EU farm milk pay prices reported by the EU Commission by price has fallen amid falling other product prices and a healthy evolution of milk production. The January 2023 raw milk price fell 3.5% to €56.6 per 100kg. The EU price milk equivalent based on SMP and Butter prices also fell sharply to finish January at €42.3 per 100kg.
April is the start of the new 2023-24 season but so far, the northern parts of Europe and the British Isles have seen colder snaps which are not perfect conditions for dairy cows. For cows to be on the grass gazing well thereby increasing their propensity to produce milk, conditions must be perfect. Nonetheless, milk production so far this year has been strong ending up across most parts of Europe. Assuming normal weather conditions, production would ramp up into the season.
The good news is, going into April, mild temperatures at a little over 10 degrees Celsius should prevail which would auger well for milk production. The seasonal increase in milk production will put further pressure on milk prices and keep them lower to steady, at least throughout the peak production season. Adding to that pressure is powdered milk stock, which is plentiful in Europe currently, so we may not see strong demand for milk to churn into powder.
Another price influencing factor towards the end of the season is the March Global dairy Trade auction which registered a fall in prices. The GDT index traded down 0.7% with an average selling price of $3403. This also gives an indication milk prices are in a bearish territory now but a reported decrease in input cost has been the reason why farmers are not feeling the immediate effect of the fall in farm-gate prices.