Falling dairy prices and their impact on the European market

As the global dairy industry experiences fluctuations, the European dairy market faces unique challenges. Falling prices, inconsistencies in milk production due to variable weather conditions, and the shadow of global market shifts all contribute to uncertainties. These dynamic times call not only for awareness but also for proactive steps and sustainable solutions to ensure the stability of the sector, says Rabobank in a new forecast.

European Dairy Prices Decline

Since June, European dairy prices have been on a downward trend. Although prices are still higher than in 2021, a concerning trend is observable.

Slight Growth in Milk Production

Milk production in the EU countries and the UK grew by 0.5% year-on-year in the second quarter of 2023. However, extreme weather conditions have affected production in various EU countries.

Pressure on Milk Powder Prices

Prices for milk powders in Europe, especially skimmed milk powder, are experiencing a significant decline. This is partly driven by developments in the New Zealand dairy auction and competition in the export market.

Dairy Inflation Above 2021 Levels

Price inflation for dairy products in the EU is leveling off but remains above 2021 levels. With changing consumer and business spending patterns, this is being closely watched.

Future Challenges

Falling milk prices and a minor drop in costs are putting pressure on EU dairy farmers. Key areas of concern include tax returns, harvest costs, and rising manure disposal costs.

Rabobank emphasizes the need for sustainable solutions and a proactive approach within the European dairy market. Monitoring current trends and anticipating future developments will be essential for the well-being and stability of the sector.

Rabobank.nl