European Dairy Market Summary

MADISON - Mar 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:   The milk production quota yearend nears and
reports indicate that overall milk output during the April 2004 - March 2005
year is trailing the previous year.  Milk volumes in Germany and Italy appear
to be ahead of quota levels with most other country volumes within limits.
Milk producers and handlers are aware of this lagging trend, but are very
optimistic that production during the new year will be back to quota volumes.
At this point, milk receipts at plants are increasing, thus milk handlers
state that the new season is off to a positive start.  A cold winter is
causing some concern about pasture conditions and the potential for delayed
growth, although producers indicate that it is still premature to get overly
anxious about this possibility.  A strong Euro against the U.S. dollar
continues to slow international sales activity.  Some traders report that they
are able to put together small lot sales, but report minimal sizable orders.
Many European traders are awaiting the outcome of a recent inquiry for skim
and whole milk powder for second quarter delivery.  Traders feel that Europe
is a strong potential source for this need, but also state the powder for
recent international needs has been sourced out of the U.S.  European traders
and handlers continue to feel that intervention offerings during the open
season will be light.  During the first 10 days of the open season, 946 MT of
skim milk powder and 1,984 MT of butter have been offered to intervention.

EASTERN EUROPEAN OVERVIEW:  Reports indicate that milk production is on the
increase in Eastern Europe.  For most of the new EU member countries, their
milk volumes are lighter than last year, but producers and handlers are
looking forward to the new season with optimism.  Stocks of manufactured dairy
products are available, but limited at this time.  Suppliers are clearing
warehouses to prepare for the new season which is just getting underway.
Sales activity remains light.

0930c steve schneeberger  (608)224-5084

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STAT News Service