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Strong European Food Production Forecast to Strengthen

16 July 2015

ANALYSIS – Europe’s farmers are expected to produce more milk, meat and cereals this year, says the European Commission in its latest outlook.

Exports will continue to be favourable, given the current depreciation of the Euro against the US dollar, which the Commission expects to continue for the rest of 2015.

The report revealed cereal exports for the 2015/16 marketing year, recently ended, to be 60 per cent above average and the long suffering sow herd to be recovering, helped by lower feed prices.

Dairy production is up, sparking a rise in skimmed milk powder and butter production in the absence of Russian cheese demand.

Last year’s record harvest saw cereal production soar 15 per cent above the five year average and lift eight per cent on the 2013/14 marketing year, seeing the EU become self-sufficient in maize.

“Exceptional climactic conditions”, particularly in summer, boosted production, the report added.

Meanwhile, exports from several key EU countries were described as stable or strong.

Soft wheat and maize were up the most markedly, with soft wheat production up 11 per cent in Germany and 39 per cent in the UK and France and Hungary seeing maize harvests lift 23 and 36 per cent respectively.

Low Milk Price Reigns in Quota Effect

Lower milk prices have been overridden by speculative farmers anticipating quota removal, the report said, predicting deliveries to be one per cent higher this year than in 2014.

The report revealed pasture productivity, as taken from the Mars-Bulletin Crop Monitoring, to be close to the “historical maximum” in much of central Europe, the Baltics and the UK and Ireland.

The average EU milk price in May was 19 per cent below the previous year, although Hungary, Slovenia, the Czech Republic and Portugal have higher milk deliveries in spite of farmgate prices.

Meat Production Growing

Feed prices have helped pig and poultry production grow, while the Commission has noted an overall meat consumption recovery, forecast to continue this year and next.

Pig meat production has been recovering for seven years of sow herd contraction, although producers continue to be in financial difficulty.

The report said, despite pig meat prices strengthening, they markets remain adrift of recent years and businesses do not always cover production costs.

Summarising the year’s positive export performance, the report said: “Increased production, lower meat prices, a weaker euro and a strong demand from Asia constitute several advantages the EU pig meat exporting companies have benefited and that prompted EU pig meat exports at higher level than in 2014.”

Beef production is expected to increase 1.4 per cent this year, the Commission anticipates. Higher dairy cow culling and Spanish beef herd expansion are forecast to drive growth.

The report added that Estonia, Latvia, Luxembourg and Austria tried to dodge quota levies through cow culling.

Since 2010, the Commission has tracked a 290,000 head beef cow decline that has been directly replaced with dairy cows.

Poultry Finding Opportunity Post-Russia

The Outlook said the EU’s poultry markets have been buoyed by more opportunity to supply Asian and African markets, particularly Hong Kong and Angola, following the avian influenza outbreak in the US.

Imports are down and exports are up. The report said the Philippines, Benin and Ghana are “more than compensating” for loss of Russian markets.

The report added: "Even if the Russian market would reopen earlier than assumed, trade would not resume at similar levels as in the past due to an expected higher Russian domestic production and the deterioration of its economic situation."

Uncertainties

Greek economic fortunes, exchange rates, the possibility of a heat wave and the onset of an El Nino were flagged as possible aggravating factors on the Commission outlook. 

A heat wave during the grain-fill period could limit promising yields, the report added, also underlining €/$ exchange rates as being important for export performance going ahead.

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms

 

Top image via Shutterstock



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