The decline of the euro, coupled with a revival in milk production prompted by higher prices, has raised prospects for Europe's dairy exports in particular cheese, which is to recover to pre-crisis levels.

 

USDA has lifted estimates for EU exports for most dairy products, including milk powders, of which the region is the second largest shipper after New Zealand.

 

A weaker euro has made EU products like dairy more competitive on the world market since February 2010, the USDA report said.

 

Export hopes have risen in particular for cheese, of which the EU - the world's top-ranked exporter - now looks set to ship 530,000 tonnes this year, 12% more than originally expected.

 

Demand for cheese during the first four months of 2010 is growing. The sector believes that cheese, in particular branded cheese, will be the main dairy product in which the EU can compete on the world market.

 

Better demand has fed through into an increase in prices of Italy's major cheeses, such as Parmesan. Higher production will be centred in Germany and France, which accounts for more than one-sixth of EU output, the report said.

 

Prospects are also improving for trade in milk powders, in particular skimmed milk powder, for which exports will hit 240,000 tonnes, 15,000 more than initially expected.

 

Demand for milk powders is growing in Asia, in particular in China, the report showed, also flagging the gradual selldown of EU stocks built up by intervention buying last year.

 

 

The increase of farmgate prices for raw milk is expected to continue in 2010 resulting in higher milk deliveries from farmers to processors, according to the report.