The European Commission expects that there will be an increase in the dairy cow kill in 2023, as a result of declining milk prices and high input costs.
In its short-term outlook, it said that the reduction in numbers could be partly compensated for by increasing milk yield, assuming normal weather conditions.
“Despite a slight decrease in EU milk deliveries (-0.2%), processing availability might still be kept stable thanks to higher milk fat and protein contents.
"The cheese and whey processing stream is expected to be favoured by the industry, due to EU export potential and relatively stable domestic cheese consumption.
“Butter and skim milk powder (SMP) production could decline due to the larger than usual stocks (taken over from 2022), which could partially cover the increase in exports and domestic use,” it added.
This year, despite stable milk fat and protein availability, butter and SMP production streams are not expected to increase.
“A decrease of 0.2% in supply is expected for both products and it is assumed that growing demand will partly be covered from stocks.
“In the case of SMP, EU exports are likely to recover (+8%), especially to destinations in southeast Asia where EU market shares had previously been taken over by other competitors due to their competitive prices and geographical proximity (eg New Zealand, which increased SMP availability as its milk was re-channelled from whole milk powder to SMP and butter),” the Commission said in its outlook.
EU domestic SMP use could also grow, it added, and this is likely to be pushed by a demand for fat-filled powders as well, especially in more price-sensitive markets.
Demand recovery in China and stable UK and US demand could support EU butter exports growth (2%).