MD_DA100 European Dairy Market Overview Report 49 - Released on December 8, 2022 WESTERN EUROPEAN OVERVIEW: Milk production for much of Western Europe is at or just beyond the low point for the year. Dairy industry sources project that milk volumes will trend higher through the remainder of the winter. After a summer of milk output volumes below expectations, year over year monthly milk production has turned positive for a few countries. According to CLAL data made available to USDA, the provisional October 2022 cows' milk delivered to dairies in the UK was 1,260,900 MT, up 2.3 percent from October 2021. Year-to-date milk deliveries through October 2022 in the UK, 12,850,300 MT, are 1.1 percent less than year-to-date milk deliveries through October 2021. And according to the Agriculture and Horticulture Development Board (AHDB) in Great Britain, November milk deliveries in Great Britain (England, Scotland and Wales) are estimated at 1,011 million liters or roughly 1,041,000 MT, up 3.8 percent from November 2021. Analysts attribute the milk growth to favorable autumn weather leading to strong pasture growth rates and greater production per cow. Higher milk pay prices have also prompted farmers to hold onto cows longer and use better feed concentrations to optimize milk production. Industry analysts expect the strong year over year milk growth to continue in 2023. As inflation for food and non-alcoholic beverages within Great Britain hit 14.6 percent, a recent industry research project studied how further price increases may impact consumer purchases of meat and dairy products. In their study, the AHDB developed a model to predict the potential buyer loss from the price increases. The recently released study results suggest that cows' milk and cheese are staple products for a dairy related meal and tend to be more resilient than some other product categories. Over the last year, the average price increased 32 percent for cows' milk and 14 percent for cheese. Applying the model developed through the study suggested that a further average price increase of 5 percent for milk would result in approximately 8 percent of buyers choosing not to purchase the milk at the new average price. And a further average price increase of 5 percent for cheese would result in approximately 1 percent of buyers choosing not to purchase cheese at the new average price. As consumers try to adjust to new price points, promotions can be a valuable tool to help bring shoppers back to some food categories. The EU agreed to cap the price of Russian crude oil getting shipped outside the EU to $60/barrel and ban imported Russian crude oil coming into the EU via the sea. The measure is to apply additional pressure on Russia for their invasion of Ukraine last spring. The price cap is criticized by Ukraine and some other Eastern European countries as being too high and still providing Russia with a margin for its oil. EASTERN EUROPEAN OVERVIEW: According to online dairy industry sources, August 2022 milk production in Ukraine was approximately 711,000 T compared to 845,000 T of milk produced in August 2021. The Russian invasion of Ukraine has disrupted normal dairy business activities, and the recent missile attacks have left numerous dairy processing facilities without power. As a result, the processing facilities were unable to fully process the milk or transfer it to other facilities. While manufacturers are trying to honor their obligations to purchase farmers' milk, they have limited demand for the milk and spot milk and dairy product values are often 20 to 40 percent less than those of milk and dairy products within the EU. According to the Ukrainian agricultural ministry, as of December 1st, the 2022 Ukraine grain harvest is approximately 85 percent complete for a total of 41.9 million tons of grain. The harvest is made up of about 19.4 million tons of wheat, 5.6 million tons of barley, and 15.5 million tons of corn. When fully complete, the country expects to harvest about 51 million tons of grains, compared to the 86 million tons in 2021. Ukraine has been able to export 17.2 million tons of grain so far in the 2022/23 grain season, down 31.9 percent compared to grain exports at the same stage of the 2021/22 grain season. Information for the period November 28 - December 9, 2022, 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