As EU milk production continues to expand post-quota, so too have dairy commodity exports from the single market. The latest data from the EU milk market observatory shows that year-on-year cheese exports from the 28 EU member states increased in January 2016 to eight of its top 10 export destinations (Switzerland and South Korea excluded).

With trade to Russia blocked since 2014, the US has assumed the position as the EU’s largest market for cheese and exports to that destination are still expanding strongly, increasing by 7% in January compared with last year.

After doubling in volume terms last year, EU butter exports to the US continue to perform robustly in 2016, with year-on-year butter shipments to the US rocketing 46% in January. Thanks to the Kerrygold brand, Irish butter accounts for almost half of EU butter exports to the US.

However, while exports have been increasing over the last year, dairy commodity prices have continued to tumble, with EU prices for cheese and butter down almost 20% in the last 12 months. Butter quotes this week from the Dutch dairy board are back more than 16% since the beginning of the year.

Ornua PPI

Closer to home, Ornua announced on Wednesday that its product purchasing index (PPI) for the month of March was 84.2 points, down 1.3 on February. This equates to a farmgate milk price of 23.7c/litre including VAT.

The index has fallen for the past 12 consecutive months, showing a drop of 17% in the value of dairy commodities exported by Ornua (typically butter, cheese, whole milk powder and protein products).

The PPI remains significantly below any level recorded since the 2010 base year, with co-ops due to begin setting milk prices for March this week.