Despite the continued decrease in raw milk prices in the EU since the beginning of last year, EU milk deliveries remain quite stable, estimated to have increased by 0.3% in 2023, indicates the data synthesis conducted by the DGAgri analysis service.

Weather conditions have been more favorable than in the challenging 2022, helping to reduce feed costs and contributing to better feed quality, thereby increasing the milk solids content (+0.2%) and supporting a 1% increase in milk production.

While global demand for dairy products is still relatively tight, lower EU dairy product prices are expected to support a recovery in exports, especially of milk powder.

EU cheese and whey production is likely to benefit from greater milk availability and competitive prices. In both cases, this could support a 1.5% increase in EU exports and 4.5%, respectively.

Despite the actual decrease in dairy cow numbers and under normal weather conditions, EU milk supply is estimated to remain relatively stable in 2024 (+0.2% year-on-year).

Although energy and fertilizer prices are above the peak of 2022 and are on a downward trend, they are still high compared to previous years.

This, combined with the decrease in raw milk prices, high inflation in the EU and globally, and increasing interest rates, creates uncertainty about dairy farmers' margins in 2024.

With more milk channeled into WMP so far (likely leaving some milk fat available after processing) and an expected increase in SMP production in the coming months, EU butter production could increase by approximately 0.3% in 2023.

Greater availability and more competitive EU prices (also compared to other fats) could also help boost EU exports (+7%) and contribute to some growth in domestic use (+0.4%), especially in processing.

In 2024, the export recovery trajectory is not expected to be fully sustained; EU export growth could be lower (+2%), and EU domestic use is likely to grow more modestly (+0.2%).

Beyond expectations, fresh dairy product production is increasing (cream and drinking milk). Since it is unlikely that EU exports will expand due to declining demand from China, additional volumes may be consumed domestically, showing greater resistance to price increases than other animal origin products.

This could lead to an increase in total EU consumption (+0.7%), but this change would be hardly noticeable on a per capita basis due to slight population growth trends (+0.1%). In 2024, EU consumption is likely to return to a declining trend (also supported by a slowdown in population growth), which could lead to a decrease in EU production (-0.9%), while EU exports could remain stable. (Photo: Pixabay)