European Dairy Market Summary

MADISON - Feb 2/06 - 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 OVERVIEW:  Although very cold temperatures are being reported
in many areas of Europe, milk production does not appear to be
negatively affected at this time.  Overall milk volumes are trailing
last year, but some producers will still need to adjust their
marketings before March 31 to avoid over quota penalties.  February 1
has arrived and powder and butter can now be produced for intervention
offering March 1.  Most producers and handlers do not foresee
significant volumes of skim milk powder being readied for offering.
Even with slow international sales, powder stocks will most likely be
held versus offered to the program.  On the other hand, butter
offerings are anticipated to be heavy with maximum levels under the
program possibly being reached.  Along with most manufactured dairy
products, butter sales and demand remain very light.  As some traders
indicate, "demand is extremely quiet".  Prices for European produced
dairy products are basically unchanged and reported as nominal.  A
fluctuating U.S. dollar against the Euro is, for the most part,
keeping prices unchanged.  Traders state that price adjustments at
this time would do little to encourage sales activity, but the market
tone for milk proteins and powders is firm with butter weak.  Calf
milk replacer demand is strong.  For the most part, intervention
stocks are gone.  The recent sale basically cleaned out the
inventories.


EASTERN OVERVIEW:  Cold temperatures are also being reported in
Eastern Europe.  Milk production continues to increase in many
countries, but the cold snap might slow the increase.  Milk production
is strong in Poland and the Baltics, while within quota levels
elsewhere.  Eastern European traders and handlers report slow
international sales, with most trading activity centering around
internal EU demand.  Stocks of manufactured dairy products are
available, but not excessive at this time.

0930c steve Schneeberger  (608)250-3204

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STAT News Service