The EU has published a reasonably positive outlook across the main sectors of farming for 2021.
It has noted the improvement in relations with the USA following the removal of the Boeing-Airbus tariffs, which had a negative impact on dairy exports to the USA.
Relations with the other major trading partner - the UK - are still settling in after the UK’s departure from the single market and customs union at the start of January.
The other more general observation is that the hoped-for return to more normal trading conditions in the second half of the year following COVID-19 vaccinations is expected to create a pickup in demand for agri food.
Milk and dairy
While EU milk production increased by 1.7% in 2020, the number of dairy cows fell for the fifth year in a row, down by 1.1% in 2020, with only Ireland showing an increase.
Output is forecast to increase by 1% in 2021, with another decline in cow numbers of 1%.
Prices have been increasing in Q1, with butter and whey prices both up 13%, WMP was up 11%, SMP up 9% and butter at €3,800t was at its highest level since July 2019.
Despite these increases, butter was 26% below Ocean price and WMP is 11% lower.
The US price is similar to the EU in all categories, apart from SMP which is 11% lower.
Production of fresh dairy products grew by 1.7% in 2020, while consumption increased by 1.2%, reflecting the impact of COVID-19 on consumer behaviour, but this isn’t expected to continue in 2021.
Consumption is expected to fall or remain slightly above 2019 levels.
Beef, sheep and pig meat
EU beef production was down 1.2% in 2020, though there was a small increase in the suckler herd, up 0.4% or 48,000 head. Production is forecast to decline a further 0.9% in 2021.
Exports were up 1.8% in 2020 and a further 1% increase is forecast for 2021.
Imports on the other hand plummeted, down 21%, caused by the collapse in the food service sector because of COVID-19.
A modest recovery of 2% is predicted for 2021 as the EU food service sector gradually reopens.
EU pigmeat production increased by 1.2% in 2020, driven by export demand with a 1m tonne 18% increase in sales to China.
After several months of decline, EU prices have started to increase again because of sustained demand from China, while production is forecast to increase by 0.7%
A strong performance in the second half of 2020 meant that sheepmeat production increased by 2% for the year overall, but a reduction of 1% is expected for 2021.
Total imports of sheepmeat to the EU were down 7.2% for the year, with New Zealand back 9% because of poor weather, higher shipping costs and better markets in Asia, particularly China.
The EU forecasts a further 3% decline in imports for 2021 despite the high prices in the EU.
Even with record levels of production in 2020/21, consumption is increasing significantly, driven by the increase in demand for animal feed in China.
The surge in energy prices and corresponding increase in fertiliser prices put pressure on farmers' margins.
The EU forecasts 44.3m tonnes of cereal exports in 2020/21, a drop of 26%, and 22.6m tonnes of imports, a drop of 10% on the previous year.
EU cereals stock-to-use ratio is expected to remain stable at 16.5% year on year.