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Per Capita Cheese Consumption In European Union Expected To Reach 39.6 Pounds In ’17

NMPF, Other Ag Groups ‘Extremely Concerned’ That Restrictions On Steel, Aluminum Imports Could Hurt Ag Exports

A further 1 percent increase in per capita cheese consumption in the EU is expected this year, bringing the figure to 18 kilograms (39.6 pounds) per capita, according to a report from the European Commission.
EU cheese production is expected to increase by more than 2 percent in 2017 compared with 2016, said the latest EU short-term economic outlook for ag markets.

EU cheese production is driven by the growth in the industrial use of Mozzarella to make pizzas. The use of cheese in burgers and sandwiches is also increasing. Retail sales and catering use continue to increase, though to a lesser extent.

Global cheese demand is growing steadily, especially in Asian countries. In the context of lower availability in New Zealand, the EU and the US are benefiting fully from market opportunities, and in the first four months of 2017, EU cheese exports rose by 7 percent.

The main EU cheese customer remains the US, which absorbs more than 15 percent of EU exports, but shipments are stable. By contrast, EU cheese exports to Japan rose by 40 percent and to South Korea by 23 percent. Total Japanese cheese imports remained stable over this period, highlighting the jump in the EU market share, the report noted.
EU cheese exports this year are expected to grow by 6 percent and further increases are expected next year.

EU Butter Output To Decline
Record butter prices in the EU and worldwide highlight the imbalance between supply and demand. Butter, and more generally milkfat, is “very much in demand” worldwide, the report explained.

It is replacing margarine; in the EU, the retail sales and catering use of margarine and spreads have fallen by 6 percent in the last four years, while butter sales have risen by 3 percent. In addition, butter has partly replaced palm oil in food processing. The industrial use of butter and cream grew significantly, not just in Europe.

Global butter trade increased by 11 percent in 2016. The decline observed in the first four months of 2017 is due to a lack of availability in New Zealand, the main world supplier, whose exports fell by 9 percent, and in the EU (exports down by 28 percent).

Moreover, cream exports have risen significantly (up 24 percent for the EU in the first four months of 2017), thereby drying out the butter market further,.

In 2017, despite strong demand, EU butter production is expected to fall by 3 percent, owing to the reduction in milkfat content and because better returns can be obtained from cheeese and whey processing than from butter and skim milk powder (SMP). In the context of lower availability, exports are expected to fall by 20 percent.

Through April, SMP production in the EU is about 10 percent lower than a year earlier, and the same reduction is expected for the rest of the year, as cheese processing is more profitable. By contrast, SMP exports are projected to increase by 24 percent, allowing for a reduction in private stocks.

Low SMP prices favor exports, the report noted. In the first four months of 2017, EU SMP shipments increased by 13 percent. Exports to most destinations grew, except to Saudi Arabia and Egypt.

Chinese imports increased the most (up 43 percent), and more generally exports to Asian markets performed extremely well (Vietnam, Thailand, Indonesia and Malaysia). Also, exports to Algeria, the EU’s main customer, increased by 16 percent.

Whole milk powder (WMP) production last year increased signficantly (up 4 percent), driven by dynamic domestic demand, mainly for chocolate processing, the report said. By contrast, WMP production is expected to fall 2 percent this year, despite good export demand in the first four months of the year (up 6 percent) because processors can get better returns from producing cheese. WMP exports over the year as a whole are expected to decline by 5 percent.

The good performance of WMP exports in the first quarter was linked to higher shipments to Algeria, a very uncertain market, in the context of reduced supply from New Zealand.

In recent years, rapidly rising milk exports, especially to China, partially compensated for the structural decline in liquid milk consumption. In the first four months of this year, however, EU milk exports fell by 24 percent.

By contrast, cream exports grew strongly, mainly to China, South Korea and Angola, driving an increase in production. A further small drop in total output of fresh dairy products is expected in 2017.