August 19, 2019

Heat, Drought Put Damper On EU Milk Production

 |  By: Fran Howard

June’s severe heat wave that impacted much of Europe did not do as much damage to milk production as expected, but Mother Nature turned up the heat in July. In France and the United Kingdom, where temperatures climbed in late June, milk production was actually higher than a year ago.

With most of the major EU milk-producing countries already reporting June milk output, early indications suggest year-over-year production through June will be flat, if not less than the previous year, according to Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management. Greece, Spain, Cyprus, Austria, Poland, and Sweden have not yet reported June milk collections, but for the rest of the members of the EU-28, milk production in June totaled 13.3 million metric tons (MMT), just 0.2% less than the previous year on a daily average basis. For the first-half of 2019, Dorland notes that these countries produced 0.5% more milk than the comparable period a year ago.

“France released the most puzzling milk production figures, with June output at 2.03 million metric tons, or 0.25% more milk than a year ago,” Dorland says. “Sweltering heat with temperatures that climbed well above 100 degrees in large swaths of the country’s agricultural-producing regions in late June, begs the question of why output bettered previous-year levels.”

In July, drought conditions in France worsened and a second record-breaking heat wave, which led to widespread water restrictions, negatively affected pasture growth. The unrelenting heat and dryness resulted in 2.5% of France’s milk herd being culled and sent to slaughter, she adds.

Germany and the Netherlands, which also suffered from a late June heat wave, reported significant milk production declines relative to the previous year. Output in Germany fell by 64,400 MT, while production in the Netherlands sank 32,200 MT below year-earlier levels. “Less milk available to German processors came largely at the expense of driers, with whole milk powder and skim milk powder output dropping 13.5% and 1.5%, respectively, as more milk moved to cheese compared to last year,” Dorland notes. The Netherlands made 21% more whole milk powder (WMP) and 17% less skim milk powder (SMP) and also reported more cheese output relative to year-ago levels.
Combined June milk production in Ireland and the United Kingdom offset declines from Germany and the Netherlands. “Clearly, Ireland and the United Kingdom continue to expand output,” Dorland says. “Recently, producers in Ireland have started to increase concentrates, such as corn, in their dairy cow rations. Initially, they started to feed more concentrates when fodder was scarce last winter, but the practice continued into spring to encourage greater production. Given the recent decline in U.S. feed prices, it is possible that Irish producers will continue their concentrate feeding at current levels well into the fall.”

Despite weakening output throughout much of the EU-28 and the United States, Glanbia announced it is cutting July milk prices in Ireland by 1 cent per liter, or about 44 cents per hundredweight, due to subdued demand in some markets. "Suppliers should note that current milk prices do not fully reflect the weaker dairy market," Martin Keane, chair of the Glanbia board said.