A new report from the European Commission has looked at the future for farmgate prices across the EU over the next 10 years.
Milk prices are expected to recover to moderate levels in the short term, according to the European Commissions Prospects for EU Agricultural Markets and Income 2015-2025 report.
It also says that EU grain prices are set to remain relatively low and a spike in future prices will depend on a major production shortfall in one of the main producing regions.
According to the European Commission, worldwide meat consumption is also expected to increase over the next 10 years with production volumes increasing for most types of meat.
Highlights from the report
Cereal and Grain Outlook
Cereal prices are expected to be relatively low across the EU for the next 10 years, according to this report.
But, it also says that prices are expected to recover close to €190/t for common wheat by the end of the outlook period, moreover upward spikes are likely for periods following a production shortfall in a major producer.
Cereal prices, in 2015, remained between €150-180/t on the back of solid world demand, which is expected to remain steady in the medium term.
In the EU, domestic demand for cereals and oilseeds is driven mainly by feed use while potential production will be constrained by a reduction in arable land area.
The report indicates that cereal production in the EU is expected to grow to around 320m tonne by 2025 with demand coming from both the feed and export markets.
According to this Outlook report, wheat and barley levels are set to be below historic levels, but maize stocks will recover from the current low levels of production.
Protein crop production is also set to rise by 40% over the outlook period due to a favourable policy environment and strong protein demand from intensive livestock enterprises.
Dairy Outlook
Milk prices are expected to recover to moderate levels in the short term, before increasing to an average of €360/t in the last five years of the outlook, according to the European Commission.
The Prospects for EU Agricultural Markets and Income 2015-2025 report also suggests that the risk of short-term market imbalances will remain with only 7.5% of world production traded in 2025.
The report says that about 50% of the additional milk produced in the EU could be used for powder while a further 30% could be used for cheese in the next 10 years.
The current low prices for dairy commodities and milk are mainly the result of a surge in world and EU supply at a time when China and Russia have reduced imports, it says.
However, it indicates that demand from other regions of the world has risen significantly and is expected to grow steadily over the outlook period.
The annual increase in world imports and rising EU domestic demand will support an increase in deliveries, which is close to 1% annually to reach 164m tonne by 2025.
Meat Outlook
Meat consumption worldwide is expected to increase by 15% between 2015 and 2025 which is equivalent to a year’s total meat production in the EU.
Meat consumption has also increased in the EU, it says, with the overall per capita meat consumption recovering by 1.8kg in 2014.
Furthermore, meat consumption in the EU is expected to reach 67.6kg by 2016 before the resumption of the previous downward trend.
The European Commission also says that beef production in the EU continues to be driven mainly by dairy herd developments with production expected to sit a 7.6m tonne in 2025.
After decreasing over several years, sheep and goat meat production and consumption are expected to stabilise at the current level due to improved profitability and demand remain stable despite higher prices.
It also expects pigmeat production to increase by 2% by 2025 as compared with 2015, with exports from the EU expected to grow steadily, supported by sustained world demand and slightly improving prices.
According to this report, EU poultry production is expected to expand over the outlook period by close to 4%, while consumption could increase only marginally
