EU Dairy Market Q1 2024: Mixed Trends as Butter Supplies Decline and Cheese Production Rises
Source: The DairyNews
In the first quarter of 2024, the availability of dairy products in the EU exhibited varied trends, with most products showing an increase in supplies, as reported by AHDB. However, butter supplies notably continued to decrease due to a reduction in production, coupled with lower imports and exports.
Milk deliveries in the EU saw a rise of 1.5% year-on-year, reaching 35.29 billion liters. This increase primarily bolstered cheese production, which benefited from both higher milk deliveries and reduced processing costs due to lower energy prices. On the other hand, the production of butter and skimmed milk powder (SMP) remained subdued.
Butter Supplies Face Downward Pressure:
The decline in butter supplies can be attributed to lower production rates, influenced by higher cream prices that limited churning activities. Although demand was generally limited during the quarter as buyers had secured their needs, there was a noticeable improvement in retail demand towards the end of Q1.
Cheese Market Sees Growth:
In contrast, the cheese sector experienced a positive quarter, with supplies increasing due to enhanced production driven by good retail demand and higher imports. The availability of milk fat also played a significant role in boosting cheese production, making it a standout in the dairy sector during this period.
Powdered Milk Dynamics:
The availability of skimmed milk powder (SMP) also increased by 9.0% year-on-year, despite a drop in production, thanks to a 19.6% rise in imports. However, exports saw an 11.0% decline, with reduced demand from China, South Africa, the Middle East, and other Asian countries. Whole milk powder (WMP) production remained stable, with only a slight decline in available supplies by 1.9%, reflecting steady production levels and a marginal increase in exports.
According to the latest EU short-term outlook, milk deliveries are expected to rise by 0.4% year-on-year in 2024 due to higher yields and stabilizing prices. This is anticipated to lead to increased production of dairy products. However, subdued global demand may continue to impact dairy exports negatively. The overall macro-economic situation and the policy directions of new governments in countries like France and Spain are critical factors to watch in the upcoming months. Additionally, increasing legislative pressures to meet environmental objectives and enhance animal welfare standards within the EU will continue to shape the dairy industry's landscape.
Butter Supplies Face Downward Pressure:
The decline in butter supplies can be attributed to lower production rates, influenced by higher cream prices that limited churning activities. Although demand was generally limited during the quarter as buyers had secured their needs, there was a noticeable improvement in retail demand towards the end of Q1.
Cheese Market Sees Growth:
In contrast, the cheese sector experienced a positive quarter, with supplies increasing due to enhanced production driven by good retail demand and higher imports. The availability of milk fat also played a significant role in boosting cheese production, making it a standout in the dairy sector during this period.
Powdered Milk Dynamics:
The availability of skimmed milk powder (SMP) also increased by 9.0% year-on-year, despite a drop in production, thanks to a 19.6% rise in imports. However, exports saw an 11.0% decline, with reduced demand from China, South Africa, the Middle East, and other Asian countries. Whole milk powder (WMP) production remained stable, with only a slight decline in available supplies by 1.9%, reflecting steady production levels and a marginal increase in exports.
According to the latest EU short-term outlook, milk deliveries are expected to rise by 0.4% year-on-year in 2024 due to higher yields and stabilizing prices. This is anticipated to lead to increased production of dairy products. However, subdued global demand may continue to impact dairy exports negatively. The overall macro-economic situation and the policy directions of new governments in countries like France and Spain are critical factors to watch in the upcoming months. Additionally, increasing legislative pressures to meet environmental objectives and enhance animal welfare standards within the EU will continue to shape the dairy industry's landscape.
