The UK remains a key market for Irish dairy exports with trade growing by over 15 per cent to around €1.1bn last year.

According to latest data from Bord Bia, this accounts for 37 per cent of total dairy exports and the strongest performances were evident in butter and cheese.

Exports to continental EU markets grew by more than a quarter to account for 29 per cent of total dairy exports. Trade was valued at €875m. The best growth was recorded in exports to Belgium, France, Germany, Netherlands and Italy, while there was some marginal decline to Eastern Europe.

According to Bord Bia, the value of exports to international markets did not rise in line with the EU with only a marginal increase evident to reach just over €1bn in 2013.

It noted a significant increase in the value of exports to China, Hong Kong, Malaysia and Vietnam, which offset lower trade to the US, Saudi Arabia and South Africa.

“The share of dairy exports destined for markets outside of Europe now stands at 34 per cent. The strongest-performing product categories were butter, cheese, infant formula, milk and cream, WMP and whey.

“The value of butter exports grew in 2013 due to a 10 per cent increase in volumes and higher average prices. The value of butter exports to Continental Europe grew strongly boosted by significant volume increases to Belgium, France and Germany. Cheese accounts for almost a quarter of dairy exports reaching €725m. The value of exports increased by seven per cent, driven by a three per cent rise in volume and higher unit prices.”

The food authority also found that cheese exports performed well to the UK, Germany, Netherlands, Italy, Russia and some Middle Eastern markets.

Also of significance was the fact that infant formula exports increased due to a big increase in the value of sales to China, Hong Kong and Vietnam offsetting declines to some Middle Eastern markets.

“The overall volume of infant formula sales was relatively static,” Bord Bia also noted.

By late 2013 global monthly milk production was 400,000 to 500,000 tonnes higher compared to a year previous, reflecting a significant rebound in dairy producing conditions in many countries, Bord Bia also found.

It noted in New Zealand milk production is forecast to increase by five per cent for the 2013/14 season.

“Australian production continues to struggle despite lower costs and better feed availability as farm debt and herd condition may hamper growth. An increase of one to three per cent is forecast for the current year, although levels will remain below that of two seasons ago.”

There is potential for a significant production response in the US given the lower feed costs with the USDA forecasting an increase of over one per cent for the 2013/14 season, it added.

China will continue to be a major driving force of global markets due to a combination of domestic milk production issues and demand for imported milk powders.

“The global demand for dairy products heading into 2014 is strong as indicated by the 3rd December Global Dairy Trade auction with winning bids increasing by an average of four per cent. Many countries that were forced to the sidelines by Chinese buyers throughout 2013 are returning to the market to re-build stocks.”

Bord Bia states that the prospects for Irish dairy exports in 2014 remain broadly positive with global demand likely to help clear any increase in output to keep prices well ahead of historical averages.

“Global stock levels and the relative strength of the euro will largely determine price prospects. Some further growth in output is likely as producers gear up for the removal of quotas in 2015,” it concluded.