European Dairy Market Summary

MADISON - Feb 16/06 - 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:  Lower temperatures in many areas of Europe appear
to be slowing milk production growth.  Many milk producers indicate
that their milk marketings have leveled off from recent gains.  For
some producers, this is not an adverse situation especially when they
were potentially looking at over quota volumes by the end of March.
With the slow down in milk receipts, manufacturing plants remain
fairly active, although they are not putting pressure on suppliers or
traders to move heavier than desired stocks.  Sales activity out of
Europe continues to be reported as quiet and slow.  European traders
state that stocks of competitively priced product and often better out
of South America and other sources are further slowing sales activity.
Traders are hopeful that as the milk production season winds down in
the Southern Hemisphere, this will once again encourage international
buyers to return to European sourced dairy products.  Prices are
generally steady with butter markets on the weak side.  The opening of
intervention nears.  As March 1 approaches, reports indicate that
butter volumes are being readied for clearance to intervention.
Producers and handlers continue to feel that butter offerings will be
heavy during the open season.  Since February 1, skim milk powder can
also be produced for intervention clearance, but reports indicate that
this preparation is not as active as it has been in recent years.  At
this time, producers and handlers do not foresee significant volumes
of power clearing the intervention.  This could change quickly if
international buyer interest does not develop.  At the present time,
internal or domestic demand for skim milk powder is clearing to animal
feed buyers.


EASTERN OVERVIEW:  Cold temperatures continue to be reported in
Eastern Europe.  This cold trend appears to be slowing milk production
to the point that some Eastern European producers are finding this
situation somewhat beneficial as the March 31 milk quota yearend
nears.  Some traders state that sales activity out of Eastern Europe
is more active than their Western counterparts.  Much of this has to
do with lower priced offerings.  Stocks of product are available and
will continue to increase as milk production develops for the season.

0930c steve Schneeberger  (608)250-3204

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STAT News Service