European Dairy Market Summary

MADISON - Jul 21/05 - 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:   Weather conditions in Europe continue to impact
milk production.  Recent rainfall and milder temperatures have eased the
decline in milk output in some regions, while hot/dry conditions in others
continue to be reported.  Although milk production is on the downside of the
year, overall milk volumes continue to surpass last year's levels for this
time of the season.  Some producers, especially in those regions that are not
getting needed moisture, are starting to voice concerns about winter feed
supplies.  At this point, forage harvest is not as positive as many producers
desire.  At the most recent Dairy Management Committee meeting on 14 July, the
common refund for skim milk powder was reduced another 30 Euros per MT to 120
and butter was reduced 50 Euros to 920.  Intervention remains open, but
offerings during recent weeks have slowed greatly.  Since 1 March through 10
July, 35,387 MT of butter have been offered.  This offering is comparable to
volumes for the same period last year.  Skim milk powder offerings stand at
5,324 MT, about four times less than last year.  International buyer interest
is light and unaggressive.  Traders and handlers state that a quiet market is
not unusual for this time of the season, although sales activity has been
light for much of the current season.  As the summer holiday season begins,
traders do not anticipate significant buyer interest for another 4 - 6 weeks.
 Stocks are readily available for buyer needs with prices holding steady to
slightly firmer for most products, but steady to slightly lower for butterfat.
Traders feel that buyers are hesitant to place orders due to current pricing,
but also state that they do not foresee much downside to prices in the future.
 European producers, handlers, and traders will be closely monitoring
Oceania's start to their new milk production season.  They state that this
region could greatly influence future demand and prices for European products.



EASTERN EUROPEAN OVERVIEW:  Milk production in this region of Europe is at or
just past the seasonal peak.  Milk volumes are reported to be running ahead of
last year at this time, although many producers indicate that output is not
any heavier than recent years, just that milk is being marketed differently
versus home consumption and/or processing.  Stocks of Eastern European
manufactured dairy products are available for immediate or future buyer
interest.  At this point, international sales are limited to occasional spot
buyers needs.  Prices for Eastern European production are often slightly lower
than their counterparts is Western Europe.  Traders and handlers do not
foresee significant weakness in future prices, with some indicating slightly
higher asking prices.

0930c steve schneeberger  (608)224-5084

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STAT News Service