Heatwaves Push European Milk Supply Into Deficit, Driving Dairy Prices Higher
Extreme heatwaves across the United Kingdom and parts of Europe are beginning to reshape dairy market dynamics, temporarily shifting the sector from oversupply to undersupply and providing much-needed support to milk prices.
According to the latest estimates from the Agriculture and Horticulture Development Board (AHDB), Great Britain’s milk production has fallen by approximately 18.5 million litres due to prolonged periods of high temperatures. Similar trends are emerging across mainland Europe, with France reporting a 7% year-on-year decline in milk output during week 26, while German production dropped by 3.6% over the same period.
Heat Stress Taking a Toll on Dairy Herds
Dairy cows are particularly vulnerable to heat stress because high milk production generates significant metabolic heat. Elevated daytime and nighttime temperatures reduce feed intake, resulting in lower milk yields and slower recovery even after temperatures normalize.
Beyond immediate production losses, heat stress can have longer-lasting implications for animal health and fertility. Cows tend to spend more time standing and less time lying down and ruminating, increasing physiological stress and potentially affecting reproductive performance for weeks or even months.
Market Moves From Surplus to Temporary Deficit
Before the onset of the heatwaves, British milk production had been running 1.6% to 2.0% above the five-year average. However, during the heatwave period, output slipped to only 0.4% above average, significantly tightening milk availability.
The production decline has coincided with volume management schemes and several reported processing plant disruptions, amplifying supply constraints.
As a result, European dairy markets have witnessed a notable strengthening in prices.
Key Market Developments:
- 🥛 Spot milk prices have risen to 38–48 pence per litre (ppl), increasing by approximately 10–15ppl from previous levels.
- 🧈 Bulk cream prices have climbed to as high as £1.60–£1.68 ex works, substantially above AHDB’s late-June estimate of £1.37.
- 🇳🇱 Dutch dairy commodities have also strengthened, with cream prices increasing by €250–300, skimmed milk powder (SMP) up by €200, and butter prices rising by €100–200.
There are also reports that some cheese manufacturers have diverted milk to the spot market due to attractive pricing, potentially creating tighter cheese supplies in the coming months.
Grass Growth Concerns Add Further Pressure
The heat is not only affecting milk yields but also reducing forage availability.
AHDB’s latest forage monitoring data indicates grass growth rates have slowed dramatically to between 6 and 40 kg dry matter per hectare per day in certain regions. Growth declines sharply when temperatures exceed 25°C, particularly under limited soil moisture conditions.
This raises concerns about feed availability and production costs during the remainder of the summer.
Dr. Richard Wynn, Head of Research and Development at Fevara, emphasized the need for farmers to reassess feeding strategies.
“Heat stress changes how animals behave. Livestock become less active, seek shaded areas, and often reduce feed intake precisely when their nutritional requirements are elevated,” he noted.
Experts are recommending measures such as:
- 🌿 Adjusting basal rations
- ⚖️ Using rumen buffers
- 🔋 Incorporating protected fats
- 🦠 Adding live yeast supplements to support rumen function and energy intake
Price Rally May Be Short-Lived
Despite the recent market optimism, analysts caution that the current price increases may only represent a temporary reaction to weather-related disruptions.
Underlying global market fundamentals remain relatively bearish. Milk production in major exporters such as the United States and New Zealand continues to expand, while the latest Global Dairy Trade (GDT) auction recorded a 4.9% decline in prices. Additionally, global butter inventories remain elevated.
Consequently, while heatwaves have provided short-term support to European milk prices, the longer-term outlook will continue to depend on global supply growth, consumer demand trends, and weather developments in key dairy-producing regions.