European Dairy Market Summary

MADISON - Mar 30/06 - 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:  The European milk production season continues to
build.  Some contacts feel that the increase has been slowed by cooler
than usual temperatures in recent weeks and slow pasture growth.
Usually, by this time, more producers have had to curtail production
growth as the milk quota yearend neared.  This year some producers,
especially in Italy and Germany, will have to adjust their marketing
as milk volumes surpass quota limits or incur super levy charges.
There are some additional countries that are very close to quota
maximum levels, but will probably make it through the March 31
deadline.  Eleven of the original fifteen EU countries will realize a
0.5% increase in their milk quotas for the upcoming quota year.  The
other four countries had an immediate increase in their quotas when
quota adjustments were announced a few years ago.  Producers and
handlers do not anticipate that this increase will be immediately
noticed, but will probably become apparent nearer the end of the 2006
- 2007 quota year.  Manufacturing schedules are increasing seasonally,
although a larger proportion of milk is clearing through the fluid
milk side of the market versus butter/powder, whole milk, or casein.
Some small lot or immediate delivery sales are being reported, but not
significant enough to indicate that demand will continue to grow.
Traders state that buyers are still holding off placing orders until
prices weaken.  Intervention for butter continues to open in more
countries.  At the present time, twelve countries are able to offer
butter to intervention which indicates that butter prices and
commercial demand are weak.  For producers to become eligible to offer
to this program, commercial butter prices need to be at or below
intervention levels in their respective country.  The Dairy Management
Committee met again on March 30.  Since March 1 through March 24,
butter intervention offerings total 11,760 MT and skim milk powder
offerings remain at zero.


EASTERN OVERVIEW:  Spring weather conditions in Eastern Europe are
slow in developing.  Although milk production is increasing, cooler
than usual temperatures are hindering new pasture growth and impacting
late season/winter feed supplies.  The 2005 - 2006 milk quota yearend
is near in Eastern EU member countries.  Milk volumes in many of the
countries will be within quota limits with some countries, such as
Poland and the Czech Republic, very close to threshold limits.  Milk
continues to flow to manufacturing facilities throughout Eastern
Europe.  Stocks are starting to build, although some small lot,
immediate delivery sales are being reported.

0930c steve Schneeberger  (608)250-3204

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STAT News Service