European Dairy Market Summary

MADISON - Sep 29/05 - 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:  Milk production in Europe continues to edge lower
seasonally.  Milk volumes are declining to the point that, when possible,
manufacturers and handlers are now directing milk toward products of most
need.  It appears that cheese production continues to garner a significant
portion of available milk volumes.  Although cheese production is seasonally
strong, milk proteins, especially whey, are in short supply.  Traders and
handlers state that supplies are limited for near term shipments
(October/November) but anticipate a better supply/demand balance after that
time.  The Algerian tender has yet not been settled.  A third round of bidding
is due early in October.  European traders state that the results of this
tender and future Dairy Management Committee decisions will greatly influence
future trading activity out of Europe.  The Dairy Management Committee met on
September 29.  At this session, common refunds for skim milk powder were
reduced by 20 Euros to 100.  Again, the Commission reduced export refunds
under the tendering system by 5 Euros, skim milk powder to 130 and butter to
990.  Prices for many products have ceased their recent decline and are
showing signs of strength.  Stocks of products are mixed.  Some traders and
handlers indicate that supplies for whole and skim milk powder are not as
plentiful as previously indicated, while butter is more available.  Recent
sales to Russia have cleared good volumes of butter to this region.  Traders
feel that Russia will probably be in the butter market for the near term.
Anhydrous milk fat is in short supply and prices are firm.  All in all,
international trade remains light and unaggressive, although traders feel that
if prices continue to firm, buyers will return to the marketplace.


EASTERN EUROPEAN OVERVIEW:  Milk production in Eastern Europe continues to
decline.  Weather patterns are starting to follow early fall trends, thus milk
volumes will continue to trail off and will drop more rapidly if temperatures
drop sharply and pasture growth deteriorates.  Trading activity continues out
of this region on a limited basis, but more active than in Western Europe.
Traders and handlers are awaiting the result of the pending Algerian tender
with optimism.  Many still fell that Eastern European sources should be in a
position to fill a significant portion of their needs.

0930c steve schneeberger  (608)224-5084

---

STAT News Service