Change of focus for Irish dairy exports

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According to DairyCo, the volume of Irish dairy exports destined for EU member states reduced during last year while exports to countries outside the EU increased, suggesting a shift in export focus.

The shift appears to be well underway for Skimmed Milk Powder (SMP), with its exports to non-EU countries increasing by 10,400 tonnes (63%) in January to November 2014 compared to the same period in 2013.

The proportions of Irish butter and cheese that leave the EU are much smaller but growing.

In the same period, butter exports to non-EU nations rose by around 3,100 tonnes (58%) and cheese increased by 5,100 tonnes (24%).

As part of this the UK has seen a decline in Irish imports, with butter falling by around 7,560 tonnes (23%) in January to October 2014 compared to the same months the previous year. Irish Cheddar imports also reduced (falling 12%) over the same period, but were partly offset by a rise in speciality cheese, resulting in an overall 3% fall in the volume of cheese entering the UK from Ireland.

Ireland’s current trend towards non-EU markets is likely to continue as Irish processors have been investing in butter and powder facilities over recent years, although this trend will largely depend on the rate of growth in Irish production and future buyer demand.

Meanwhile, healthy milk supplies along with the strengthening of Sterling against the Euro, has put some downward pressure on UK wholesale prices.  Counterbalancing this was a small rise in export demand for EU dairy commodities, which helped to support prices for some dairy products.

Butter and cream prices both fell during January, with butter down by £50/tonne (2%) and cream dropping by an average of £70/tonne (7%).  As is normal for post-Christmas trade, prices began the month at low levels, but have seen some upward movement as the month progressed. This was primarily the result of the weakening Euro which enhanced the competitiveness of EU exports and limited the normal seasonal price drop. The improved market conditions for butter also helped to stem the downward pressure on cream prices arising from continued strong milk production as cream supplies are diverted to butter manufacture.

Prices for SMP remained unchanged in January at £1,425/tonne.  Markets were reported to be relatively quiet with supply and demand well balanced. The improved prices at the Fonterra auction, along with additional demand from an Algerian powder tender kept markets stable.