With the milking season winding down in the southern hemisphere, dairy markets have their attention firmly fixed on the spring flush of milk coming from Europe. Dairy commodity prices have held steady so far in 2018, buoyed by the severe drought which hit New Zealand.

However, milk production data from Europe’s big dairy countries will set the tone for dairy prices into the back end of 2018.

Unfortunately, the early figures show continued milk supply growth. Eurostat data published this week pegs German milk production for January at 2.7bn litres – a more than 5% increase year on year.

Co-ops in Germany have cut 9c/litre off milk prices since January, which may curb further milk supply growth for the rest of the spring.

In France, which is Europe’s second-largest milk producer after Germany, milk collections for January stood at 2.1bn litres – a 4% increase year on year.

Despite a 100,000 head reduction in the national dairy herd, Dutch milk production in January was flat at 1.2bn litres as farmers drive yields per cow.

Preliminary figures for February show Dutch milk collections fell 1% to just over 1bn litres last month, which is likely a reaction to recent milk price cuts.

UK dairy processors have also cut milk prices since the start of the year, which is why UK milk production for January fell 2% below 1.2bn litres.

In the US, milk production continues to expand like clockwork, with output growing 2% in both January and February.

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