A new report by the European Commission Milk Market Observatory found that milk production in the first quarter of 2016 increased by 7.2% (2.6m tonnes).

In percentage terms, high production was particularly strong in Ireland, Cyprus, Luxembourg, Belgium, and the Netherlands.

With regards to volume, Poland and Germany were among the top, along with Ireland and the Netherlands.

The economic board of the Milk Market Observatory said part of this rise in the first quarter can be related to the leap day this year.

EU milk price continues to fall

Average farmgate milk prices approximated 28.4c/kg in March and a further decrease is expected for April (27.7 c/kg).

The milk producer margin index showed stabilisation in the last quarter of 2015 and the first quarter of 2016 thanks to the joint movements of milk prices and feed and energy costs.

Based on the latest developments in cow slaughtering, heifer numbers and pasture conditions, the Commission is now forecasting a 1.4% increase in EU milk production over the whole of 2016.

This will be higher in Ireland, which has seen the highest year-on-year increase in the number of dairy cows in the EU (+10%). The European Commission expects milk supply to increase by 7% in 2016.

According to the report, however, “butter stocks are healthier thanks to dynamic exports and cheese stocks continue to be rather reasonable, as companies maximise use of their drying capacities, keeping milk volumes out of the cheese market”.

The report adds that “improvement in the supply/demand equation remains necessary”.

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