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Euro milk mirage

Key highlights

The initial surge in EU milk production post quota removal has passed.
And with milk prices low, we expect EU production growth to continue to slow, if not turn negative.
All up, this trend supports our long-held view that global dairy prices will recover over 2016.
 

Report prepared by:

Nathan Penny, ASB Rural Economist
Phone: +64 9 448 8778
Email: nathan.penny@asb.co.nz


EU milk production growth is slowing. EU farmers, like their NZ counterparts, are indeed feeling the pinch from low milk prices.

Certainly post-quota, EU production surged. But the reality of a low global milk prices has soon replaced the post-quota euphoria. It’s no wonder Euro farmers have their hand out.

Indeed, we emphasise the recently-announced EU support measures should be taken at face value. That is, the EU is providing support to farmers under stress from low milk prices.

It follows that global prices are likely to recover this year as EU production growth slows further. In particular, with NZ production likely to fall and Chinese demand improving, the conditions for the dairy price cycle turning are falling into place.

Read the full PDF Report



Important Disclaimer - The views expressed herein are those of the authors and are based on information believed but not warranted to be correct. Any views or information, whilst given in good faith, are not necessarily the views of ASB Bank Limited and are given with an express disclaimer of responsibility and no right of action shall arise against any of the authors, ASB Bank Limited or its employees either directly or indirectly out of any views, advice or information.
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