As usual, the big two in Europe continue to set the tone for EU dairy markets.

Right now, all eyes in dairy market circles are on Germany and France, Europe’s first- and second-largest milk-producing countries.

Big declines

In the final months of 2018, milk production in both countries had fallen into reverse, with big declines seen in French milk output in particular.

Fodder shortages following the summer drought was the primary reason for the decline in milk production in both countries.

With this trend set to roll into 2019, dairy market prices have been very stable as we approach the seasonal peak in European milk supply.

If fodder shortages continue for spring, German and French milk production could remain subdued, which would support farmgate milk prices.

Milk production

Of the other large milk-producing countries, the start to the 2019 milking season has been very different.

In the UK, which is the third-largest milk producer in Europe, milk production for January was up 5% year on year to 1.25bn litres.

In Poland, January milk production increased more than 3% to hit just under 990m litres.

And, in Ireland, January milk production, albeit at a seasonal low, was up 1% to 160m litres.

Exception

The only exception to this story of expanded milk production in Europe’s large dairy exporters is in the Netherlands, where phosphate quotas have resulted in a major decline in Dutch milk output.

For January, Dutch milk production was down 5% year on year to just over 1.1bn litres.

Down in New Zealand, milk production continues its robust growth for the 2018/19 milk season, with January milk collections soaring almost 8% year on year to hit 2.4bn litres.

New Zealand milk production is entering its seasonal winddown from March as cows begin to dry off ahead of the winter period in the southern hemisphere.