Bloomberg

(Bloomberg) -- When bacon was abundant it was everywhere: in your jam, on seemingly every burger, even flavoring bourbon. So if history is any guide, this year's food trend is extra cheese.

The reason is the U.S. is sitting on more butter and cheese than it knows what to do with, and the Europeans are to blame.

Exports from the European Union have climbed so far this year and last -- even after the bloc's once-largest customer, Russia, banned trade in retaliation for sanctions over its incursion in Ukraine. A glut of milk, plunging prices and a weakening euro mean the EU has been able to grab customers in Asia and the Middle East, while U.S. sales have fallen.

European dairy products are so cheap right now that the U.S. itself has become the new No. 1 customer for some products -- imports of EU butter doubled last year and rose 17 percent for cheese, according to the European Commission. All that excess supply is building up in U.S. refrigerators, especially as American dairy production heads to a record this year. 

USDA statistics show cheese inventories at the end of March were the highest for the date since 1984, the year Prince's "Purple Rain" was released. More than half of the supply is American cheese, while Swiss accounts for about 2 percent, and the rest the government classifies as "other."

 "It's been difficult for them to export, given the strong dollar, and they're sucking in imports," said Kevin Bellamy, a global dairy market strategist at Rabobank International in Utrecht, the Netherlands. “Where the U.S. has lost out on business, Europe has gained.”

This year, the EU has boosted butter exports by 27 percent while cheese shipments rose 13 percent, according to the European Commission.

Even though sales increased, things are still pretty dire for European dairy farmers, who've warned for months that rock-bottom prices risk putting them out of business. Average raw milk prices in the EU have slumped to the lowest levels since 2010. U.S. prices have also started falling, with cheddar on the Chicago Mercantile Exchange trading this week at a five-year low.

To contact the author of this story: Whitney McFerron in London at wmcferron1@bloomberg.net.

To contact the editor responsible for this story: Timothy Coulter at tcoulter@bloomberg.net.

©2016 Bloomberg L.P.

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