Dairy market experts in Brussels are forecasting 2015 milk output growth of just 1.2% for the 28 member states in the European Union (EU). As a result, EU officials are optimistic that milk prices for European farmers will be reasonably stable in 2015.

Meanwhile, on Tuesday, the latest Global Dairy Trade auction was positive, with an overall 1.1% increase in prices. It was the sixth consecutive auction price rise, although the lowest gain since January 20.

In a generally upbeat assessment of the dairy market outlook, officials in DG Agri told the Irish Farmers Journal on Tuesday that there has been a slowdown in milk production across Europe in the first two months of the year, even in countries not faced with a superlevy bill for over-quota milk supply.

Buyers of dairy products are said to be holding back on purchasing beyond 1 April in the expectation that EU supply will increase sharply after milk quota abolition. This is creating some concern among dairy processors, who describe current market conditions as “fragile”.

However, experts in Brussels-based DG Agri do not expect a surge in European milk production in 2015, as they believe that 2014 output was exceptionally strong. EU milk production for the 11 months to the end of November 2014 was up 5% on the previous year. Processing capacity at peak season will limit growth in some regions, they said.

“Our thinking is that it should be quite smooth as we had the big shock in 2014,” experts at DG Agri said.

The 2014 production surge was due to a combination of favourable weather, lower feed costs and a high milk price.

EU Agriculture Commissioner Phil Hogan agreed that the overall level of production increase will not be dramatic. “There are about seven to eight member states that will increase production,” he said.