European Dairy Market Summary

MADISON - Mar 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:  Cold, winter weather conditions continue to prevail
throughout much of Europe.  Milk producers and handlers state that
these conditions are quite unusual for this time of the season.
Usually by now, some signs of spring are being reported, but these are
few and far between this year.  Milk producers indicate that winter
feed stocks are sufficient to maintain positive production growth as
the new season gets under way.  It is still too early to speculate if
weather conditions are hindering or limiting production growth.  This
is still a time of the year when producers need to be aware of their
milk marketings as the milk quota year end nears.  For many producers,
milk volumes are lighter than recent years, thus more producers will
not need to adjust their marketings due to overproduction.  In Europe,
reports indicate that overall production is running about 2% behind
last year.  In years past, much of the overproduction was addressed in
the final month or so before the end of the year.  This year, milk
handlers and producers feel that the whole season has been better
managed to avoid last minute adjustments.  The Dairy Management
Committee met on March 16 for the first time since intervention for
butter and skim milk powder has been open.  As of March 12, no skim
milk powder has been offered but 5,739 metric tons of butter has
cleared.  Producers and handlers continue to feel that butter
offerings will be heavy and powder volumes will be minimal.
Intervention is open in 9 European countries at this time for butter.
Market prices are just below intervention equivalents.  As milk
production increases in Europe, so is manufacture of most dairy
products.  The market remains firm for milk powders, whey, and other
protein sources, while weak on the butterfat side.  International
buyer interest remains slow and unaggressive.  Most traders feel that
buyers remain absent from the market as they monitor prices.


EASTERN OVERVIEW:  Winter weather conditions and cold temperatures
continue to be reported in Eastern Europe.  Milk producers, especially
those within the EU, are closely monitoring their milk marketings as
the March 31 quota year end nears.  Some producers in the smaller,
less dairy oriented, countries will need to adjust their output, while
the larger, more dairy oriented, counties are in pretty good shape.
Traders and handlers within this region still question the amount of
product that they will have available for sale during the upcoming
production season.  Most are optimistic that buyers will return to the
market soon for near term and future deliveries so that stock levels
do not get out of control.

0930c steve Schneeberger  (608)250-3204

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STAT News Service