Report 11 – Released on March 12, 2020

WESTERN OVERVIEW:

There are widespread good feelings within the Western European dairy industry that 2020 has begun on a good basis. Spring is present in many Western European dairy countries.Temperatures are seasonally moderate. Production is moving upward toward the seasonal peak in April – May.

2019 milk production increases were not as strong as had been projected early in 2019.Nevertheless, there was a 0.4 percent increase, according to Eurostat. The increase occurred even with 2019 decreases in some of the primary milk producing countries. German milk production was -0.1 percent, France recorded -0.2 percent, Netherlands recorded -0.7 percent, and Italy finished 2019 with -0.2 percent. Ireland was a strong Western European producer with +5.3 percent for 2019. The agglomeration of smaller Western European milk producing countries and some Eastern European milk producing countries overcame the negative results in the biggest producers to yield the overall positive outcome for the EU.

The impact of corona virus in Western Europe is still more anecdotal than quantified. Many comments are heard that dairy powders and whey are moving into export markets more slowly. This week, Italy increased quarantined areas from the region near Milan, to include the whole country. Until this increase, few disruptions had been reported about German milk moving to Italian cheese factories, or in cheese leaving factories. The new restrictions in Italy limit people’s movement, close most schools, prevent many public events, and close restaurants at 6:00 PM. With the new countrywide quarantine, it remains to be seen how that may affect dairy processing and sales. It is difficult to assess the magnitude of diminished economic activity. Some bankers have cautioned that lenders will likely be more cautious in extending new credit due to the uncertainty of how things will resolve.

The process which results in prevailing retail fluid milk prices throughout Germany is being adjusted. Dairy producers are nervous that a move to lower retail fluid milk process may move back to farms with lower milk pay prices. This may occur in part due to increasing milk production in Germany.

EU cheese production during 2019 increased 0.1 percent according to Eurostat. Cheese exports from the EU for 2019, 879,704 MT, increased 6 percent. Changes for the top export destinations include the United States, 139,101 MT, +4 percent; Japan, 114,133 MT, +7 percent; and Switzerland, 62,542 MT, +1 percent. German retailers report increases in sales of sliced cheese, believed to be a result of consumers buying ahead as a result of corona virus concerns. Exports have been flowing normally, even to Italy so far. However,tightness of shipping containers has made exporting more expensive.

EASTERN OVERVIEW:

Poland, the leading Eastern European milk producer, recorded a 1.9 percent increase in milk production during 2019, according to Eurostat. Other Eastern European countries reporting 2019 increases in milk production are Cyprus, Hungary, Estonia, Greece, Bulgaria, Romania,and Latvia.

     Information for the period March 2 - 13, 2020, issued biweekly

     Published by:
     Dairy Market News - Madison, WI
     Eric Graf, 608.422.8590
     Email: Eric.Graf@usda.gov

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