European milk production continued to surge in the first month of 2016, with milk collections across the 28 EU member states for January increasing by 5.6%, or 700,000t, compared with January 2015.

Despite the poor weather, Irish dairy production continues to expand strongly, with milk output growing in January by almost 20% – among the highest percentage growth in Europe.

In volume terms, the biggest increases in milk production came from Denmark and the Netherlands, despite FrieslandCampina paying farmers a bonus from mid-December through to the end of January to dampen output.

In New Zealand, further signs of the projected declines in milk output by producers can be seen in the increased pace of cow slaughterings in recent weeks.

The total number of cows culled for the first week of March totalled almost 33,300, up from 30,190 head a week earlier and double what it was in early February.

As the milking season draws to a close over the coming months, the New Zealand cow kill is expected to peak at 50,000 head per week in May.

Prices

With no GDT auction until next week, New Zealand futures prices for both milk powders are showing very little movement and remain weak overall.

Contracts for whole milk powder (WMP) futures, which act as a proxy for the performance of the biweekly GDT, have trended slightly lower in the last week, with prices back more than 3%.

On the demand side, oil prices slipped below the $40/ba mark again over the last week, which will do no good for the buying power of oil-dependent economies, many of which are key markets for European exports.