A new USDA GAIN report projects EU-27 milk production to increase by 0.2% YOY in both 2021 and 2022. The small projected gains in supplies are due to improved average yields as cow numbers are expected to continue to decline – down 1% this year with an additional fall of 0.8% in 2022.

With flat fluid milk consumption, most additional manufacturing milk will go into cheese as domestic and export market demand both expand. Continuing declines in milk powders are expected, particularly WMP due to lack of competitiveness in China and declining shipments to the UK following Brexit implementation. Production of SMP is not expected to recover before next year, with a projected 0.6% growth to 1,560mt. Exports of SMP are also expected to increase in 2022 to 825,000t, up 1.9% from this year but still below the 831,000t observed in 2020.