o The 23rd meeting of the MMO Economic Board took place on 26/09/2017, with the participation of experts from the various steps in the milk supply chain: CEJA (young farmers), COPA- COGECA (producers and cooperatives), ECVC (Via Campesina), EMB (European Milk Board), EDA (dairy industry), Eucolait (dairy trade) and Eurocommerce (retail). Presentations and information exchanged during the meeting showed the following. o EU milk deliveries increased in July 2017 by 220 000 t while cumulated collection contracted in Jan-Jul by 0.3%. The production drop in Jul in FR, NL, DK and DE has been more than compensated by a rise in IE, IT, PL and the UK. Milk production, as well as butter and SMP production, is still higher this year than in the same period of 2015. o Average EU farm gate milk prices reached 34.2 c/kg in July 2017, 7% higher than the last 5 years' average, and 33% higher than in July 2016. Estimates for August point to a further increase. o With the exception of protein based products (SMP and whey powder), EU dairy product prices are well above medium term references. The fat- protein gap is wider than ever (4:1) with record prices for butter (647 €/100 kg) and SMP prices at intervention level. Commodity cheese prices are 3% to 17% above the 5-year average, confirming their better remuneration than butter + SMP. A stronger € (+16% since early 2017) is making EU dairy products more expensive than those in Oceania or the US on the world market. o Public intervention stocks of SMP total 357 000 t to which some 11 000 t should be added following buying-in in late summer. o The assessment of EU stock levels based on a residual approach (production + imports – consumption - exports) shows normal to low levels of SMP private stocks. Strong butter demand coupled with historically low stocks anticipate a deficit of some 70 000 t by the end of the year. Cheese stocks have rebuilt in spring, but have been decreasing again since July. o Combined world milk production grew by 0.17% in Jan-Jul, mainly fuelled by the US. New season in Oceania has started with substantial increases both in NZ and Australia and prospects point to further expansion. Growth in the US (+2% in Aug) is mainly driven by the Southwest pool. o Global exports expanded in July by 6% (milk equivalent). China leads global imports (27% growth) followed by Southeast Asia (+12%). SMP trade rocketed in July helped by low prices but could weaken through the end of the year. Despite high prices the EU increased its butter exports to the US by 56%. EU cheese, cream and infant formula exports are also increasing. EU exports of liquid milk to China have declined to the benefit of NZ. Fat Filled Powders consolidate as a product category with 450 000 t produced in the EU, mostly for export to Sub-Saharan Africa. o Domestic consumption of liquid milk continues its structural decline. Butter consumption diminishes in volume but increases in value. High butter prices may lead to substitution by vegetable fats. Consumption of organic products grows at 2-digit rate in France (although over a relatively low basis) except for liquid milk due to a shortage of supply. o The Commission Autumn Short Term Outlook retains a 0.7% increase in EU milk collection in 2017 and a further +1% for 2018. EU dairy herd is generally contracting (except in IE, AT and PL) and slaughtering rate has stabilised. Increased supply may be mostly processed into cheese thanks to good export performance and domestic consumption. o The Commission presented the farm economy factsheets for dairy based on 2014 FADN data. Dairy farms' income dropped in 2014 but was above EU average. Productivity per farm increased by 5% between 2012 and 2014. Indebtedness of dairy farms (20%) is higher than EU average. Total subsidies decreased in 2014 but still represented some 14 000€ per farm on average. o The weakening of the US$ and higher feed prices following the recent drought are a matter of concern but milk prices are expected to remain firm in the coming months despite a possible price drop for butter (correction from record levels) and SMP (expiry of public intervention). Last update : 26.09.2017 Milk Market Observatory MMO Economic Board Meeting of 26 September 2017
Transcript
o The 23rd meeting of the MMO Economic Board
took place on 26/09/2017, with the participation
of experts from the various steps in the milk
supply chain: CEJA (young farmers), COPA-
COGECA (producers and cooperatives), ECVC (Via
Campesina), EMB (European Milk Board), EDA
(dairy industry), Eucolait (dairy trade) and
Eurocommerce (retail). Presentations and
information exchanged during the meeting
showed the following.
o EU milk deliveries increased in July 2017 by 220
000 t while cumulated collection contracted in
Jan-Jul by 0.3%. The production drop in Jul in FR,
NL, DK and DE has been more than compensated
by a rise in IE, IT, PL and the UK. Milk production,
as well as butter and SMP production, is still
higher this year than in the same period of 2015.
o Average EU farm gate milk prices reached 34.2
c/kg in July 2017, 7% higher than the last 5
years' average, and 33% higher than in July
2016. Estimates for August point to a further
increase.
o With the exception of protein based products
(SMP and whey powder), EU dairy product prices
are well above medium term references. The fat-
protein gap is wider than ever (4:1) with record
prices for butter (647 €/100 kg) and SMP prices
at intervention level. Commodity cheese prices
are 3% to 17% above the 5-year average,
confirming their better remuneration than butter
+ SMP. A stronger € (+16% since early 2017) is
making EU dairy products more expensive than
those in Oceania or the US on the world market.
o Public intervention stocks of SMP total 357 000 t
to which some 11 000 t should be added following
buying-in in late summer.
o The assessment of EU stock levels based on a
residual approach (production + imports –
consumption - exports) shows normal to low
levels of SMP private stocks. Strong butter
demand coupled with historically low stocks
anticipate a deficit of some 70 000 t by the end of
the year. Cheese stocks have rebuilt in spring, but
have been decreasing again since July.
o Combined world milk production grew by 0.17%
in Jan-Jul, mainly fuelled by the US. New season
in Oceania has started with substantial increases
both in NZ and Australia and prospects point to
further expansion. Growth in the US (+2% in
Aug) is mainly driven by the Southwest pool.
o Global exports expanded in July by 6% (milk
equivalent). China leads global imports (27%
growth) followed by Southeast Asia (+12%). SMP
trade rocketed in July helped by low prices but
could weaken through the end of the year.
Despite high prices the EU increased its butter
exports to the US by 56%. EU cheese, cream and
infant formula exports are also increasing. EU
exports of liquid milk to China have declined to
the benefit of NZ. Fat Filled Powders consolidate
as a product category with 450 000 t produced in
the EU, mostly for export to Sub-Saharan Africa.
o Domestic consumption of liquid milk continues its
structural decline. Butter consumption diminishes
in volume but increases in value. High butter
prices may lead to substitution by vegetable fats.
Consumption of organic products grows at 2-digit
rate in France (although over a relatively low
basis) except for liquid milk due to a shortage of
supply.
o The Commission Autumn Short Term Outlook
retains a 0.7% increase in EU milk collection in
2017 and a further +1% for 2018. EU dairy herd
is generally contracting (except in IE, AT and PL)
and slaughtering rate has stabilised. Increased
supply may be mostly processed into cheese
thanks to good export performance and domestic
consumption.
o The Commission presented the farm economy
factsheets for dairy based on 2014 FADN data.
Dairy farms' income dropped in 2014 but was
above EU average. Productivity per farm
increased by 5% between 2012 and 2014.
Indebtedness of dairy farms (20%) is higher than
EU average. Total subsidies decreased in 2014 but
still represented some 14 000€ per farm on
average.
o The weakening of the US$ and higher feed prices
following the recent drought are a matter of
concern but milk prices are expected to remain
firm in the coming months despite a possible price
drop for butter (correction from record levels) and
SMP (expiry of public intervention).
Last update : 26.09.2017
Milk Market Observatory
MMO Economic Board
Meeting of 26 September 2017
ANNEX 1
Milk Market Situation
European Commission
Milk Market Situation
Brussels, 26 September 2017
26/09/2017
EU Milk deliveries
26/09/2017
EU Milk deliveries
26/09/2017 !!! Data from some Member States are confidential and are NOT included in this table !!!
EU Productions
26/09/2017
EU Productions
26/09/2017
EU Productions
26/09/2017
26/09/2017
26/09/2017
26/09/2017
26/09/2017
26/09/2017
26/09/2017
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
SMP 62,1 67,9 58,5 51,0 37,6 28,3 18,1
BUTTER 15,9 8,4 4,3 1,4 1,4 0,2 0,2
CHEESE 13,5 12,6 12,3 10,8 10,8 10,8 10,8
PSA ending stocks 2017
(x 1000 t)
26/09/2017
26/09/2017
ANNEX 2
EU dairy products monthly stock estimates at the end of
July 2017
EDA
EU dairy products monthly stock estimates
at the end of July 2017
Milk Market Observatory
Economic Board
September 26th , 2017
Methodology • For each dairy product and each month, the stock estimates are based on the
equation: – Stock variation = EU production + EU import – EU internal consumption – EU exports
• ZMB balance sheets and forecasts have been used as references for : – End of year stock levels – Yearly consumption levels
• Monthly production statistics are based on ZMB Dairy World publications. • Exports and imports figures are based on MMO website figures. • The initial stocks entered in the model at the beginning of 2012 are :
– SMP: 152 000 t – Butter: 80 000 t – Cheese: 200 000 t (arbitrary basis)
• The green parts in each graph mean that this stock level can be considered as normal for the month.
• The orange part means that this stock level can be considered as too high for the month
• These qualifications are based on the EDA analysts’ personal views and past market observations.
ANNEX 3
Perspectives from the Dairy Trade
Eucolait
Perspectives from the Dairy Trade
MMO Economic Board
26 September 2017
Outline
• Global Supply
• Global exports & demand
• Developments in key import markets
• Conclusions
Milk production in key export
regions
Milk production in key export
regions
Production outlook
• EU production still slightly down for the year to July but +1,7% in July and further growth is
expected for the remainder of the year (led by IE, PL & IT,) as current milk prices are incentivising
production
• NZ milk collection up by +7,4% in July (low season) but reportedly down in August, the
higher payout forecast is expected to drive further expansion in the next months, Outlook: +3-4%
for season 2017/18
• Australia’s milk production continues to slowly improve and was up +3% in July, Outlook:
+2-3% for season 2017/18 (if higher farm prices & adequate weather)
• US milk production up +2% in August, Southwest continues to lead national expansion
(+6,8%), down in California (-0,7-%) & Pacific Northwest (-0,3%), Outlook for 2017: +1,8%,
Outlook for 2018: +2,1% (USDA)
• Slow increases in milk production in South America in 2017
Dairy exports of main market
players in ME
Main EU export markets for all
dairy products (in value - €)
Jan-Jul
2015
Jan-Jul
2016
Jan-Jul
2017
SMP trade
• EU SMP exports: – Growth rate Jan-Jul 17/16: +39,6%
Farm economy focus by sector (factsheets) is a concise 4-paged sample of database with graphs and maps for the main sectors of EU agriculture
6
Purpose: inform, and encourage the use of FADN results available online in the database Advantages: facilitated access to key farm results by sector; little effort to produce.
7
• 11 EU factsheets
• 82 MS factsheets • dairy farms for 19 MS
• COP farms for 13 MS
• granivores for 10 MS
• cattle farms for 8 MS
• horticulture farms for 7 MS
• sheep and goats farms for 6 MS
• mixed farms for 5 MS
• other fieldcrops farms for 4 MS
• wine farms for 4 MS
• fruits farms for 3 MS
• olives farms for 3 MS
2 criteria: i) 3 MS with the greatest
share of the standard output in the EU sector (DE, FR and NL in case of dairy farms),
ii) Sectors with the greatest share of standard output in each MS,
Factsheets
8 Europa website
• Economic situation (total output, total input, main income indicators)
• Subsidies, liabilities, net worth
• Detailed output and detailed input
• Structural information, LU, UAA, assets
• Graphs, maps
9 Content
10 Income (FNVA) per AWU by regions in 2014
11 From EU dairy factsheet
12 From EU dairy factsheet
13 From EU dairy factsheet
14 Income by farm comparison for several MS
Germany France Italy
Netherlands UK Poland
15 Productivity – comparison for several MS
Germany France Italy
Netherlands UK Poland
16
Germany France Italy
Netherlands UK Poland
17
Germany France Italy
Netherlands UK Poland
Main input components – comparison for several MS
The farm economy focus factsheets can also be used to:
• inform briefly about particular farm sectors,
• indicate relative profitability of sectors,
• analyse factors influencing profitability,
• inform about differences between farms' operation,
• analyse differences between farms' results and operation in different MS (factsheets by MS).
… in addition to their main purpose: encourage the awareness and use of farming economic results already published by FADN and available online.
