European Dairy Market Summary

MADISON - Apr 27/06 - 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:  Temperatures have warmed and milk production
throughout most areas of Europe is on the increase.  Until recent
days, colder than usual temperatures, for this time of the year, have
limited production growth in Europe.  Although milk marketings are
increasing, many milk producers and handlers indicate that overall
volumes are lighter than last year at this time.  Most feel that the
spring flush will be later this season and are hopeful that summer
heat does not hinder output too early.  Along with the colder than
usual temperatures early in the season, heavier cow culling are also
reducing milk volumes.  Some replacement animals are returning to the
milking herd, although good sales of dairy animals are occurring to
other than European producers.  In recent days, the Euro has gained
quite a bit of strength against the U.S. dollar.  Traders and handlers
of manufactured dairy products indicate that the firm Euro is causing
them to lose more of a competitive edge in an already slow
international dairy market.  European powder prices remain firm in
comparison to prices elsewhere in the international market place.
European traders see that U.S. prices are lower than their offerings,
but also indicate that they have lighter than usual volumes of powder
to compete with at this time.  Currently, milk volumes are generally
clearing to cheese production with powder output still lagging
previous years' levels.  The Dairy Management Committee had their bi-
weekly meeting on Thursday, April 27.  To the surprise of many traders
and handlers, export refunds were increased on various dairy products.
The butter refund was increased 30 Euros to 995 Euros per metric ton,
butteroil was increased 37 Euros to 1241.80, and whole milk powder was
increased 40 Euros to 540.  For the period of March 1 - April 21, no
skim milk powder has been offered to the program but butter clearance
now total 25,006 metric tons.  At this rate, traders and handler feel
that it will not be too long before maximum levels of 50,000 metric
tons are reached, then everyone is curious what will happen.


EASTERN OVERVIEW:  Milk production in Eastern Europe remains slow in
developing.  As in Western Europe, Eastern output is trailing last
year for this time of the season.  Manufacturing schedules are slowly
increasing, but not at previous year levels.  Manufacturing dairy
product stocks are building and appear to be priced slightly lower
than Western offerings.  Traders and handlers state that international
buyer interest is slow to develop and hope that as the milk production
season expands, so will demand.

0930c steve Schneeberger  (608)250-3204

---

STAT News Service