It is hard to understand why US milk prices are increasing while prices in both the EU and New Zealand (NZ) are still slipping.

Although domestic consumption has improved they cannot absorb much of the 15% of last year’s exports, while the strong dollar makes them less competitive than EU or NZ on world dairy markets.

Prices for Class 111 milk (milk for cheese production) in the US have increased from $14.25/100lbs (28.56 c/l) in January to $17/100lbs (34.07 c/l) last week and futures are strengthening.

The three main blocks of world exporters of dairy products, EU, US and NZ all export more or less the same quantity of dairy produce but the breakup of these exports differ in each case.

The two biggest advantages US has over NZ is rising demand from consumption at home as well as their production of cheese where prices are more resilient. NZ exports over 90% of their production mainly in powder where both WMP (whole milk powder) and SMP (skim milk powder) prices are presently on the floor.

People might be surprised that the EU exports more cheese at present than any other dairy product and even though Russia, which imported one third of EU cheese exports, is now out of the market cheese exports have not fallen by anything like that amount.