German milk supply is now in a period of consistent decline, as monthly figures paint a picture of a slowing production. In June, German dairy farmers pumped out just over 2.6bn litres of milk, which was down more than 2% on the same month last year.

In May, German milk production was down 1.5% year on year, while April milk collections were back almost 1%. These latest figures bring cumulative milk collections in Germany for the first six months of 2019 to 15.9bn litres, which is 1% behind the same period last year.

The falloff in German milk supply is significant for Europe’s dairy market, as Germany is by far the largest milk-producing state in the EU.

In neighbouring France, which is the second-largest milk producer in Europe, milk collections for June were in line with last year at 2bn litres. French milk production for the first half of 2019 stands at 10.3bn litres, which is almost 2% behind the same period last year.

The combined effect of these declines in German and French milk collections in the first half of the year is that there is 330m litres less milk washing around Europe, which is naturally a boost for dairy commodity prices.

Meanwhile, European butter prices fell another €30 this week to €3,370/t. The record spike in butter prices seen in 2017 and 2018 has seen many food companies and bakeries that use butter as an ingredient reformulate recipes to exclude butter, which is hurting demand.