European Dairy Market Summary

MADISON - May 26/05 - 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 milk production is basically at peak
levels, with some milk handlers indicating that the peak is past.  Milk
receipts at some plants are already trending slightly lower.  Early,
unofficial milk reports indicate that overall EU milk volumes are running 1 -
2% over last year at this time.  Usually, peak levels are attained around the
end of May, thus the 2005 season is following previous year timelines.
Weather conditions during the spring have been mixed with most areas reporting
cool temperatures, but moisture conditions varied from dry to wet.  Within
recent days, temperatures have warmed and are now more in line with where they
should be for this time of the year.  Milk volumes are causing most
manufacturing plants to maintain peak production schedules, although milk
volumes are being redirected toward some products and away from others when
possible.  This year, milk powder production is not as strong with casein and
cheese production heavier.  Milk diversions away from milk powders are causing
unsettledness among some end users, especially the internal calf feed
industry.  Feed buyers are returning to the market to position themselves for
needs later in the summer and fall, thus prices are higher.  Outside of this
spurt in buyer interest, traders and handlers state that other domestic or
international buyer interest is very light and unaggressive.  International
buyers continue to hold off knowing that export licenses are very limited
through the end of June and post June sales negotiations are limited due to
the uncertainty of refunds after July 1.  Another factor limiting powder sales
is price resistance.  Minimal volumes of skim milk powder and butter continue
to be offered to intervention.  Since March 1 and through May 22, 4,925 MT of
skim milk powder and 26,450 MT of butter have been offered to intervention.
During the most recent EU Dairy Management Committee meeting, common refunds
for skim milk powder were reduced by 46% to 150 Euros and whole milk powder
refunds were reduced to 546 (16%).


EASTERN EUROPEAN OVERVIEW:  Milk production continues to increase toward
seasonal peak levels in most Eastern European countries.  Temperatures have
been cool and moisture has been limited.  Milk handlers and processors
indicate that spring development conditions run a few weeks behind Western
trends, thus they remain optimistic that the spring peak will be equally as
positive.  Eastern European manufacturers indicate that sales activity has
been and remains slow.  Some very recent buyer inquiry from Western European
buyers/traders is the most activity that many have experienced thus far this
season.  Much of this inquiry has been for supply commitments for post June
needs, but end users are still unknown.

0930c steve schneeberger  (608)224-5084

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STAT News Service