European Dairy Market Summary

MADISON - May 11/06 - 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:  Late spring and early summer weather conditions are
being reported in most European countries.  Some milk handlers state
that weather conditions have gone from late winter to early summer and
completely skipped spring.  Up to this point, milk production has been
slowly increasing and most milk handlers feel that steady gains will
continue as long as temperatures do not get too hot too early.
Although gains are being reported, milk output in Germany and France
is lagging last year at this time by 2%.  In the U.K., output is
trailing last season by 1.5%.  Elsewhere in Europe, milk production is
level with last season to up slightly.  Manufacturing schedules are
also building, but overall are trailing last season.  European
manufacturers and handlers are not overly concerned about the slow
growth in manufactured dairy product inventories at this time.  Most
indicate that sales activity continues to center around an internal
market with international sales very limited.  Some small lot,
immediate shipment sales are being reported, but overall sales
activity is slower than usual for this time of the season.  A firm
Euro against the U.S. dollar is also slowing international sales
potential and is putting downward pressure on current offering prices.
The Dairy Management Committee had their bi-weekly meeting on
Thursday, May 11. For the period of March 1 - May 5, no skim milk
powder has been offered to the program but butter clearance now total
34,573 metric tons.  Many butter producers and handlers were of the
thought early on in the open intervention season that offerings would
be heavy and the 50,000 metric ton maximum level would filled by mid
May.  Now that it is mid May, they are pushing this prediction into
late May to early June.  Also at this time, grazing of the dairy herd
is becoming more prevalent and butter produced from "grass" milk is
often cleared to PSA versus intervention which may slow attaining
intervention maximum levels.


EASTERN OVERVIEW:  Weather conditions for good milk production growth
are being reported in Eastern Europe.  It has been a cool spring thus
far, but now temperatures have warmed and pasture growth is gaining
momentum, thus milk volumes are on the increase.  Manufacturing
schedules are increasing, absorbing the increasing milk volumes.
Traders and handlers indicate that international sales activity is
slow, thus a significant portion of current production is entering
inventory programs.  Traders report that Eastern offering prices are
often slightly lower than Western European offerings, but still are
not generating any type of buyer interest.

0930c steve Schneeberger  (608)250-3204

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STAT News Service