European Dairy Market Summary

MADISON - Feb 3/05 - SNS -- Dairy market conditions in western and eastern Europe were reviewed in the latest report on the sector released by the USDA today.

WESTERN AND EASTERN EUROPE

WESTERN EUROPEAN OVERVIEW:   Milk producers in Europe are monitoring their
milk marketings as the March 31 quota yearend nears.  Reports indicate that
overall milk output is trailing last season, thus producers will not need to
make as many adjustments as in recent years.   Producers in France and the
Netherlands are narrowing the gap and will basically finish the year at or
very near quota volumes.  Although milk output is lighter than last year at
this time, some milk handlers are preparing skim milk powder for intervention
offering March 1.  Most handlers and traders feel that offerings to
intervention during the open season will occur, but anticipate maximum levels
to not be attained.  Stocks of manufactured dairy products within Europe are
reported to be available for domestic and international buyer interest.
Traders indicate that buyers are starting to return to the market, but
finalized contracts are still minimal.  For the most part, buyers remain very
cautious and are hesitant is commit to traders in hopes of further price
declines.  Most traders and handlers state that prices have weakened, but also
indicate that they do not foresee much further weakness.  Prices for skim milk
powder and butter are very near intervention equivalents already, thus they do
not know why they would decline further.  Traders and handlers feel that lower
prices and a stable Euro around 130 should encourage buyers to resume their
buying patterns.

EASTERN EUROPEAN OVERVIEW:  Eastern European milk production patterns remain
low, although indications of seasonal increases are occurring in more areas.
Winter weather conditions have been and remain typical for this region which
is not hindering production growth patterns.  Stocks of manufactured dairy
products are available, but are lighter than in years past.  International
buyer interest is returning to the region, although not significant at this
time.  Traders and handlers feel that as prices stabilize and new stocks
become available, sales activity will resume as the spring unfolds.

0930c steve schneeberger  (608)224-5084

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STAT News Service