European Dairy Market Summary

MADISON - Sep 15/05 - 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:  In the past few weeks, milk producers and handlers
are stating that milk production appears to be dropping quite rapidly when
compared to last year at this time.  Some indicate that production declines at
the end of last year were very gradual with milk declines this year more in
line with what usually happens.  With the milk quota year about one half over,
some countries are already reviewing their marketings and realizing that
adjustments will need to be made.  Reports indicate that producers in Germany
and France have cleared greater volumes of milk thus far this year versus the
comparable period last year and adjustments will need to be made before the
quota yearend in March to avoid penalties.  The European summer holiday period
has now ended and demand for fresh dairy products is improved.  Suppliers
indicate that consumers have returned home following 4 - 6 weeks of holiday
and are resuming typical early fall buying patterns.  The EU Dairy Management
Committee met on September 15 and basically announced minimal changes to dairy
policies in place.  Under the tendering system, export refunds were reduced by
5 Euros for skim milk powder (140 to 135) and butter (1000 to 995).  Now that
intervention for butter and skim milk powder has closed, final figures were
released.  Skim milk powder clearances during the open season of March 1 -
August 31 total 16,580 MT, 90% lighter than last year's 164,554 MT.  Butter
offerings totaled 142,851 MT compared to 212,681 MT last year.  Traders and
handlers report slow international sales with most market activity centered
around an internal or domestic market.  Prices remain basically steady,
although an unsettled undertone is developing.  Many feel that prices may hold
through the end of the calendar year at which time a weak trend might develop,
especially if international sales have remained limited.  For the recent
Algerian tender with bids due on September 10, no results have been released
yet.  Traders are hopeful that results will be announced within the next week
to ten days.


EASTERN EUROPEAN OVERVIEW:  Milk production in Eastern Europe continues to
decline on a seasonal basis.  As has been the case for much of the production
year, milk marketings are heavier than last season.  Producers and handlers
still feel that overall milk production has not increased, but rather
marketings of milk have changed versus home or on farm disposition.  Eastern
traders and handlers report that sales activity has maintained an internal
focus.  International sales are light.  Eastern European traders are awaiting
the outcome of the recent Algerian tender.  They are hopeful to receive a
significant portion of this buyer interest.

0930c steve schneeberger  (608)224-5084

---

STAT News Service