European Dairy Market Summary

MADISON - Jul 7/05 - 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:   Some much needed rainfall has been reported in
various areas of Western Europe.  Temperatures have moderated, although some
areas remain quite warm.  Milk production continues to decline seasonally,
although overall output continues to surpass last year's levels for this time
of the season.  Manufacturers and handlers indicate that they have product to
sell, but buyer interest is basically limited to internal or domestic needs.
Many European resort and vacation areas are preparing for the upcoming holiday
period by placing orders for delivery during the next few weeks.  Traders
continue to adjust to the most recent round of subsidy adjustments announced
in mid June.  Traders and handlers anticipated that once July arrived,
international buyer interest would resume, but this buyer interest remains
quite slow.  Traders now feel that it could be another 4 - 6 weeks before
sales resume.  Many felt that prices would adjust lower by this time, but this
is not the case, in fact prices are unchanged to higher.  The Euro continues
to loose ground against the U.S. dollar.  In recent days, the Euro has dropped
under 120 to levels not seen since May 2004.  Intervention for butter and skim
milk powder remains open, but no offerings have been reported in recent days.
Producers and handlers feel that volumes of butter and powder that have
cleared to the program will be basically all for the open season.  Since March
1, around 5000 MT of skim milk powder have cleared.  Intervention is open
until August 31.


EASTERN EUROPEAN OVERVIEW:  Warm temperatures continue to prevail in Eastern
Europe, but rainfall has been reported in recent days.  Although the rainfall
is much needed, producers and farmers indicate that it may have been too late
to fully benefit crops.  Small grains are in pretty good shape, although the
corn crop is in more jeopardy.  Milk production is declining seasonally but
continues to run ahead of last year.  Milk producers and handlers still feel
that overall production is not heavier, but marketings have increased versus
home consumption or processing.  International sales are reported as slow from
this region.  Stocks are available once buyer interest resumes.  Some Eastern,
non EU countries are reporting active buyer interest.

0930c steve schneeberger  (608)224-5084

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STAT News Service