MD_DA100 European Dairy Market Overview Report 23 - Released on June 8, 2023 WESTERN EUROPEAN OVERVIEW: While a number of market observers convey a sentiment that the European milk production peak has passed, some other sources suggest that peak production may linger and be slow to decline. In either case, milk volumes are significant and are keeping manufacturing facilities full across much of northern Europe. Manufacturing of most dairy commodities is heavy, and inventories are significant. Industry contacts report demand is lukewarm for most commodities. The exception to this case is cheese. Contacts say demand for European cheese has been strong. Price reductions in the grocery stores have spurred on some retail demand, and orders from food service channels are growing. Currently, demand is outpacing cheese production, and inventories are shrinking. Parts of France, Spain, and Italy, however, have not experienced the heavier milk output levels. Heat and dry conditions through much of the spring have suppressed milk output to levels below those of last year. In parts of Europe, there is a concern that a continued drought will raise production costs, placing more economic pressures on farmers. Dairy market observers often ask whether the industry will see significant improvements of dairy demand or milk production declines. While factors for changes in demand may be hard to discern, pressures placed on farms such as increased governmental regulations, higher production costs, unfavorable weather, and economic uncertainties seem to come to the forefront. EASTERN EUROPEAN OVERVIEW: Higher temperatures and dry weather have extended from northeast Germany into Poland and the Baltic States. The less favorable weather may slow milk production in those Eastern European countries. In 2022, Poland and other eastern countries saw year over year milk production grow compared to 2021. Earlier this week, the EU commission extended the trade measures that allow Ukrainian agricultural products to enter the EU without tariffs. The waiver of tariffs and quotas was extended for one year. The governing body also extended the ability of 5 neighbors to Ukraine (Bulgaria, Hungary, Poland, Romania, and Slovakia) to restrict the domestic sales of selected crops while allowing those crops to enter the country for export into other countries. The restriction seeks to limit the excess supply of those crops in the Ukrainian neighbors and support local market prices. The extension, requested to be eliminated by Ukraine, was prolonged to September 15. Although an agreement to continue the Black Sea grain export deal an additional two months was confirmed in May, Russia has indicated the deal would be terminated if obstacles to Russian grain and fertilizer exports are not overcome. Ukraine claims Russia has halted registrations of ships destined for Ukrainian ports, blocking shipment of grain through the three opened Black Sea ports. Information for the period May 29 - June 9, 2023, issued biweekly Published by: Dairy Market News - Madison, WI MIKE BANDLI, (608)422-8592 Email: mike.bandli@usda.gov Additional Dairy Market News Information: Dairy Market News (DMN) by Phone: (608)422-8602 DMN Website: https://www.ams.usda.gov/market-news/dairy DMN MARS (My Market News): https://mymarketnews.ams.usda.gov