European Dairy Market Overview
USDA - Thu Dec 07, 9:34AM CST
MADISON, WI.  December 7, 2017 (REPORT 49)


	At last week's meeting of the European Commission's Milk Market 
Observatory, some participants representing various components of the 
dairy supply chain offered views as to appropriate actions suggested 
for the European Commission. There was a suggestion discussed that 
global milk demand is being outpaced by supply. This led to proposing 
that a correction is needed to address imbalance and mitigate stock 
buildup. A further view expressed was that there should be room to 
release public intervention stocks, given export demand. Discussion of 
these concepts will continue. No official action was taken at last 
week's meeting.
	On the eve of official EU October milk production data being 
released, industry observers believe the data will confirm higher 
production January through October than last year. In Germany 
specifically, it is believed that 2017 expansionary trends will 
strengthen in October, with production for October 2017 expected to be 
higher than October 2016. Ireland continues to record strong growth in 
milk production. October 2017 production is believed to be over 7 
percent above October 2016. October production is believed to be up in 
France, Netherlands and Belgium. 
	Germany, the largest milk producing EU nation, is increasingly 
producing GMO free milk. Observers believe that about 40 percent of 
German milk is produced with GMO free feed. This milk often commands a 
higher price and yields a higher pay price as well.
	Through 2017 milk pay prices have increased over 2016 levels, 
even with increasing production. Through November, milk pay prices on 
a weighted average basis, increased 23.1 percent from year earlier. As 
welcome as this is to producers, there is some apprehension that if 
higher production volumes persist, prices to producers will again 
weaken. This will be closely monitored.


	Poland continues to have significantly higher milk production. 
ZMB reports that October 2017 milk production was 5.5 percent above 
year earlier. Butter production has also increased. October 2017 
butter production was 10.1 percent above October last year. 

USDA/AMS/Dairy Market News, Madison, Wisconsin
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