01 Jun 2017
EU AGRICULTURAL MARKETS SHORT-TERM OUTLOOK – 01 JUNEBrussels Daily
Short-term Outlook for EU agricultural markets in 2017 and 2018 – Winter 2017 edition
- The reduction in the EU milk supply at the end of 2016 contributed to a significant recovery in EU milk prices.
- Low cereal prices were driven by abundant world supply and stocks.
- EU meat production reached a record level in 2016 but is showing signs of downward adjustments.
EU cereal production declined by 5.5% in 2016/2017, following smaller-than-average soft wheat and maize harvests. This should result in a slowdown in EU cereal exports, in the context of abundant world supply and low prices. EU rapeseed harvest was also below average but, given the large world oilseed supply, this only resulted in a small price surge. EU sugar prices are catching up with high world prices.
Low 2016/2017 olive oil production (13% below average) together with low stock levels resulted in high prices and reduced availability of oil.
The seasonal decline in milk production was stronger than expected, leading to higher milk prices. Good exports and domestic demand led to record high prices for butter and a significant price recovery for cheese. By contrast, the skimmed milk powder (SMP) price is expected to remain around current levels given the high stock levels and that the seasonal peak of milk collection is still to come.
Sustained pigmeat exports to China facilitated a recovery in the EU price. By contrast, ample poultry supplies pushed EU prices down. Continued good beef exports held EU price decreases in check despite the high slaughter rate of dairy cows. The increase in sheep meat production is slowing down, on the back of lower prices.
This report has been prepared for the EU-28 under constant policy assumptions, with the Russian import ban assumed to be in place until the end of 2017.