There were some big swings in dairy markets from 2015 compared with 2014 that have impacted on commodity dairy prices globally. The swings in demand for different products were compounded by the euro to US dollar exchange rate, which went from $1.40 in January to $1.09 more recently. At the same time, the price of Brent oil has dropped from over $100/barrel in January 2015 to less than $40/barrel by mid- December 2015.

The buoyant US economy fuelled the US to the top of the EU export market for butter and cheese. Both are up significantly from 2014 to 2015. From January to October, EU exports of butter and cheese were up 18% for cheese to 115,877t, while butter was up 111% to 14,966t.

It is quite remarkable the difference in the price of butter at the moment. Spot prices in mid-December for the US range from $5,745/t down to $2,950/t for Oceania and are only slightly higher in the EU at $3,248/t.

Even at that, the US price is down 10% from the previous quotes two weeks earlier. That difference is not apparent for any of the other products, with only relatively small differences between skim, whole milk powder (WMP) and cheddar.

The firm trade for butter and cheese in the US has resulted in a price of 35.3c/litre equivalent for US dairy farmers. This contrasts with the latest November milk prices for the average EU price of 30c/litre and 23c/litre for New Zealand milk.

The reduction in Chinese imports of WMP (down 52% for the same period 2014 to 2015) is one of the main drivers in the WMP product price being down.

We have seen a reduction in imports nobody saw coming, as 621,000t of Chinese powder imports in January to October 2014 have dwindled to 300,000t for the same period in 2015. This year has certainly seen volatility move from post-quota theory into reality.