All the milk price and supply experts in Oceania suggest this week that the initial surge in EU milk production post-quota removal has passed.

They say with milk prices low, they expect EU production growth to continue to slow, if not turn negative.

We are seeing some signs of this already, especially in the UK.

However, our May milk supply survey of Irish processors on page 21 shows May milk supply continued to grow by between 5% and 10% compared with May 2015.

The milk price analysts suggest the downward trend in Europe supports their long-held view that global dairy prices will recover over 2016.

According to AHDB Dairy, UK daily deliveries for the two weeks ending 7 May averaged 42.5m litres/day – 2.0m litres/day (4.5%) lower than the same period last year.

Similar to the UK, French milk supplies for the last week of April, as recorded by France Agrimer, show a significant downturn, both against previous week (-0.8%), same month in the previous year (-1.3%), and perhaps most significantly, against the five-year average (-1.7%).

This trend has been clear throughout the month of April as weather was cold, growth was slow and culling of stock was higher.

The New Zealand experts continue to emphasise that global prices are likely to recover this year, as EU production growth slows further. In particular, they suggest with NZ production likely to fall further and Chinese demand improving, the conditions for the dairy price cycle turning are falling into place.

The futures market this week was flat, suggesting another positive Global Dairy Trade auction, which resulted in a 3.4% increase, building on the 2.6% increase in the last auction.