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Billions of litres of extra milk are expected to hit the global market once restrictions on European production are fully lifted, according to an NZ Herald report citing Rabobank.

The report said Rabobank’s forecasts indicated when dairy quotas were fully lifted in 2015 an additional nine billion litres of milk will be produced annually in Europe.

Rabobank’s senior global dairy analyst Kevin Bellamy said it was estimated that 3.6 billion litres of the additional production would be absorbed by more demand from the EU.

“While the remainder will likely find its way on to export markets, it will be to destinations such as the Middle East and Russia, not into New Zealand’s main export markets of Southeast Asia and China,” he said.

The staged lifting of quotas, which had historically capped dairy production in European countries, was due to be completed in 2015 and was unlikely to have an adverse impact on the industry in New Zealand, he said.

The global trade in milk had crept up to about 7.5 per cent of total production, mainly because of demand from China.

An updated outlook by Dairy Australia said European milk production for the year ended in November was 123.3 billion litres – up 2.1 per cent on the previous year.

US milk production last year was up 1.8 per cent at 86.4 billion litres, and Australia’s was forecast to grow by 3-4 per cent for 2011/12 to 9.4-9.5 billion litres.

New Zealand milk production was expected to grow by 8-10 per cent in 2011/12, with good pasture growth through the summer months.

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