Report 27 – Released on July 8, 2021

WESTERN EUROPEAN OVERVIEW:

Sources in Germany and France, the largest milk producing countries in Western Europe, havenoted than the seasonal decline in milk production seems to have increased. Hot weather iscited. At the end of June anecdotal early reporting pegs the average weekly decline inGermany as -1.5 percent. That was about 1.5 percent below 2020 YOY for the week. Frenchdairy sources believe the last week in June, milk production declined about 2 percent fromthe previous week.

July brings the annual period when many Western Europeans take multi week summer vacations. While some people are not able to travel to favored destinations, many acceptablealternative destinations are open for tourists. This will have the effect of reducing dairymarket transactional activity in coming weeks.

With the first half of 2021 behind us, sources in Western Europe now expect 2021 milkproduction to end the year up about 0.8 percent from 2020 milk production. This is lowerthan projections as 2021 began. A colder than expected start to 2021 for several months isone factor. Another factor is expectations that cow slaughter will increase later this year. The reduced dairy herd will affect milk production. There has been a trend of smaller herdsizes in some countries. For example, a German source commented that the number of dairycows in Germany has declined to the lowest number since reunification after the fall of theBerlin Wall. Rising feed costs are cited by some dairy producers as motivation to reduceherd size.

EASTERN EUROPEAN OVERVIEW:

Belarus continues to be a significant dairy product exporter in Eastern Europe according tosources. Russia is reported to remain a primary export destination, particularly for cheeseand butter. China has been increasing dairy product sourcing from Belarus, especially SMP.May 2021 exports of butter, SMP and WMP were noted to be higher than May 2020.