US milk prices fell by 18% to USD 335/MT in the two-week period ending 14th October 2020. Similarly, EU milk prices fell by 2% to EUR 460/MT during the same period, both attributed to an oversupplied global milk market.
Milk production from the six key dairy producing regions (Argentina, Australia, EU, UK, New Zealand, US is currently 1.7% ahead of last year, according to AHDB. These regions together have produced 194 billion litres of milk so far this year (January-August 2020), up 3 billion litres from the same period in 2019. The EU and US were the highest-producing regions of the group, with each slightly over 1 billion litres/year. However, the fastest growing regions during Jan-August period were Argentina (+8.4% y-o-y) and Australia (+4.9% y-o-y), albeit on the back of relatively poor performances in 2019.
Although the EU and US milk markets have shown increases in milk supply, the UK is the only region currently down on the year, though only marginally. This has been partly due to a high production year in 2019, as well as farmers actively limiting their production through the spring peak in response to the impact of COVID-19, supporting prices. In contrast, the first wave of the pandemic hit when the southern hemisphere countries had seasonally low production, thus lessening the price impact due to reduced demand.
With an uptick in EU and US milk production expected to continue, this is likely to see EU/US milk prices fall in the near-term.