European Dairy Market Summary

MADISON - Jun 9/05 - 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:   More European milk producers are indicating that
the seasonal peak is past and volumes are declining.  Up to this point, milk
output patterns have been quite positive.  Although not officially released,
milk handlers feel that cumulative milk production, through May, will be
running about 1% ahead of last year at this time.   Weather conditions have
been favorable during the spring.  Temperatures have been cool with moisture
volumes varying from in relatively good balance to limited.  Internal trading
activity is about steady with previous years, but international trade is slow
and unaggressive.  Firm prices, limited refunds for sales activity through the
end of June, and the unknown for post June transactions are limiting sales
negotiations.  European traders indicate that some trading activity is
occurring for those that possess refunds which are valid through the end of
the month.  With milk volumes at seasonal high levels, when possible, milk
continues to be diverted away from milk powders and toward cheese and casein
production.  Clearances of skim milk powder to intervention continue, but
remain about one half last year levels and significantly lighter than two
years ago.  Butter also continues to clear to intervention with current year
offerings slightly surpassing last year, but tailing 2003 levels.  The EU
Dairy Management Committee will not be meeting this week, thus updated totals
will not be available until after their June 16th meeting.  The recent subsidy
cut for milk powders is having little impact on limited sales negotiations.
The weak, fluctuating, Euro against the U.S. dollar continues to be another
factor that traders and buyers are dealing with.


EASTERN EUROPEAN OVERVIEW:  Milk production in Eastern Europe is basically at
peak levels in most countries.  Weather patterns have not been as favorable as
they have been in Western countries as hotter temperatures and dryer
conditions are being reported.  Volumes of milk are comparable with last
season, although if hot/dry conditions prevail, peak volumes might drop
quickly.  Manufacturing schedules are seasonally active, thus more product is
clearing to warehouses versus end users.  Some Western European traders and
handlers continue to question supply availability for later this summer.
Sales activity is reported as slow.  No significant sales have been reported
from this region of Europe.  Traders and handlers are optimistic that within
the next month or so, sales will resume.

0930c steve schneeberger  (608)224-5084

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STAT News Service