The reduced nitrates derogation limits in Ireland and Holland could impact EU milk output this year and is cited by Rabobank as a factor “to watch” in dairy market developments.

“Dutch and Irish farmers face lower nitrogen derogation limits… for the 2024 season and beyond, reducing the carrying capacity per [hectare], which could result in farmers re-balancing their herd size and/or higher costs for manure disposal,” states Rabobank’s global dairy quarterly for the first quarter of 2024.

Reduced milk supplies across all the main dairy producing regions – apart from Australia – will fuel a rebound in dairy farmer incomes through the first half of the year, Rabobank predicts.

Base milk prices

The bank estimates that EU farmgate base milk prices will average close to 46.1c/l, excluding VAT, for 2024 and reach 48.5c/l, excluding VAT, with premiums, at peak milk supply at 4.2% fat and 3.4% protein.

Although Rabobank forecasts a 0.2% growth in global supplies this year, it estimates that milk output in the EU and UK will be back year on year by 0.6% for the first quarter and 0.3% for quarter two.

While US milk production fell by 1.1% in January, Rabobank expects output to increase by 0.5% for 2024 as a whole.

New Zealand milk output is likely to drop by 0.7% on a tonnage basis for the 2023-24 season.

The review comes as prices at the Global Dairy Trade fell by 2.8% this week.