European Dairy Market Summary

MADISON - Feb 17/05 - 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 production in Western Europe continues to
increase gradually.  This year, more milk producers are not monitoring their
milk quota marketings as closely as in previous years as the quota yearend
nears.  Overall milk production in Europe is reported to be trailing last
year.  Some milk handlers and producers attribute lighter milk volumes to
fewer dairy animals.  Up to this point during the winter season, weather
conditions have been milder than in previous years, although in recent days,
temperatures have dropped and winter conditions are more apparent.  Some
handlers and producers feel that these conditions may curtail or stabilize the
growth that some were reporting and are hopeful that these winter conditions
will not be prolonged. Prices for manufactured dairy products in Europe have
been weak since the first of the year, but traders and handlers feel that a
bottom of the current cycle may have been attained and, in instances, slight
up-ticks in prices are being reported.  International sales activity remains
light.  Traders indicate that buyers are shopping for the best price with few
sales being finalized for April/May delivery.  Stocks of manufactured dairy
products are available and will become more available as the milk production
season resumes.  Shipments of recent international sales out of the U.S. are
occurring.  Knowing the international supply situation, tighter U.S. supplies
and firmer prices, European traders are now questioning if firmer prices and
continued buyer interest might activate USDA'S Dairy Export Incentive Program
(DEIP) program.

EASTERN EUROPEAN OVERVIEW:  Winter weather conditions are being reported in
more areas of Eastern Europe than earlier this season.  Up to this point, milk
production has been maintaining low levels, but close to resuming seasonally.
 Handlers and producers are now concerned if these conditions might take out
the early season momentum which is needed for a good production season
overall.  Available stocks of Eastern European dairy products are low, but
available should buyers return to the market.  As in Western Europe, Eastern
European producers and handlers are looking forward to the new milk production
season as a time for them to re-establish workable inventories and resume
sales activity.

0930c steve schneeberger  (608)224-5084

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STAT News Service