European Dairy Market Summary

MADISON - May 12/05 - 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:   European Union milk production is at or very near
peak levels throughout the region.  Milk producers and handlers state that
conditions have been very positive for steady production growth.  Milk volumes
are heavy, thus most manufacturing facilities are running at or very near
capacity levels.  International sales activity out of Europe is slow, fair at
best.  Current transactions are being limited by the volume of export refunds
that remain for sales through the end of June.  Stocks are available, although
buyers are absent from the market.  Much uncertainty prevails within current
markets for sales after July 1.  Traders and handlers are hopeful that the EU
Dairy Commission will establish refund levels earlier this year versus the
week before as was the situation last year.  Buyers are looking for product to
be delivered later in the summer, but suppliers are very hesitant to
acknowledge and negotiate these inquiries until export refund vales are
established.  At this point in the milk production season, manufacturing
schedules are actively generating stocks for future use.  Unusual for this
time of the production season, milk is being directed toward casein and cheese
production when possible.  These strong markets are providing an outlet for
milk versus generating butter/powder and offering larger volumes of surplus
product to intervention.  Intervention offerings remain light.  Since March 1
and through May 8, 3,295 MT of skim milk powder and 22,245 MT of butter have
been offered to intervention.


EASTERN EUROPEAN OVERVIEW:  Early season milk production trends remain
positive.  Up to this point, milk output has been running well ahead of last
year and these trends appear to continue, although moisture conditions are
lower than desired.  Overall, international sales are fair at best, also
limited by export refund through the end of June and the uncertainty of post
June refunds.  Stocks are available for immediate and future needs.  Buyers
are actively seeking product for later summer delivery, although traders and
handlers are reluctant to acknowledge this buyer interest due to the
uncertainty of export refunds for that time period.

0930c steve schneeberger  (608)224-5084

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STAT News Service