European Dairy Market Summary

MADISON - Jun 23/05 - 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:   Hot temperatures and dry conditions are being
reported in many areas of Europe.  Milk output is past the peak, thus
producers and handlers feel that these weather factors could negatively impact
output on the down side of the production season.  Milk production through May
is reported to be 1.5% higher in EU15 countries, 6.0% higher in EU10
countries, and 2.2% higher in cumulative EU25 countries.  International buyer
interest remains light.  Traders and handlers feel that potential buyers are
holding off placing orders until prices weaken, but at this time, prices have
not weakened.  During the most recent EU Dairy Management committee meeting
June 16, export refunds were reduced for many dairy products.  Butter was
reduced by 320 Euros to 970 per MT; butteroil, reduced by 400 Euros to 1210;
Whole milk powder was reduced 25 Euros to 521; with skim milk powder unchanged
at 150 Euros.  Casein manufacturing aid was decreased to 0.52 Euros per 100
KG.  Casein aid a year ago was 6.7 Euros per 100 KG.  These adjustments are
having little impact on current prices except butteroil.  Intervention
offerings remain limited.  All of the current powder has cleared during March,
April and early May, with no clearances occurring since mid May.  Since March
1 and through June 12, 4,925 MT of skim milk powder has been offered.  This
total compares to 17,230 MT for a comparable period last year and nearly
80,000 MT for the period in 2003.  In 2002, maximum intervention offerings of
109,000 MT were already attained by this time and a tendering system was in
place for additional clearances.  Within the past few days, PSA maximum levels
of 110,000 MT for butter have been attained, thus no more compensation for
additional offerings will be made.


EASTERN EUROPEAN OVERVIEW:  Hot temperatures and dry conditions are also being
reported in Eastern Europe.  The milk production in this part of Europe runs a
few weeks behind Western patterns, thus milk output is now being reported at
peak levels.  Through May, milk production is reported to be running 6% higher
than last year.  Milk handlers feel that overall milk production is not
increasing, but more milk is being marketed than last year.  Stocks of
manufactured dairy products are available from this region of Europe, but
international buyers are limited.  Traders also indicate that some non EU
Eastern European countries have product available at lower prices which could
supersede EU 25 sales, although consumer confidence in these countries'
quality is sometimes questioned.

0930c steve schneeberger  (608)224-5084

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STAT News Service