In the four-week period ending 22nd July 2020, Mintec EU milk prices rose by a tepid 4% to EUR 475/MT, attributed to the increase in retail sales, as consumers switch their buying patterns from dine-in restaurants to home cooking and baking.
EU milk production is expected to increase by 0.7% year-on-year (y-o-y) in 2020, to 148 billion litres. However, this growth only comes in the first half of the year, with production in both Q3 and Q4 expected to be around 0.2% lower than last year. Improvements in milk yields which has been the main driver of production, through a combination of higher usage of purchased feeds and good quality pasture. While the milking herd is expected to continue to decline (-0.6% y-o-y), the growth in yields is expected to compensate for the smaller herd size.
As retail sales across the EU pick up, especially ready meals, this will offer gradual support for EU milk prices, although this is expected to not fully recuperate the losses in foodservices, in particular for fresh dairy products.
Overall, as European economies ease their restrictions, coupled with recovery from China, EU’s largest exporter, the Mintec price of EU milk is expected to modestly rise.