European Dairy Market Summary

MADISON - Jun 8/06 - 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:  Milk production in many parts of Europe appears to
be holding steady at peak levels.  Although milk output has generally
peaked, reports indicate that total volumes are trailing last year.
Milk handlers state that producers experienced a slow start to the
season due to cool and wet conditions.  For producers, they feel that
these adverse conditions limited production potential within the
milking herd.  Slow, later that usual, pasture growth is also a
contributing factor.  Butter intervention levels of 50,000 MT have
been attained within the past two weeks, thus no additional offerings
are being accepted under the guidelines.  Now a tendering system will
be implemented for future offerings.  The first bids under the
tendering system are due June 13.  The Dairy Management Committee did
not meet this week but will convene next Thursday, June 15.  Traders
and handlers continue to report that international sales activity is
slow and unaggressive.  Traders feel that high European prices are a
major factor limiting buyer interest.  Although milk production is at
or very near peak levels, manufactured dairy product supplies are not
overly excessive.  As the milk production season increased,
manufacturers that are able, are directing milk volumes to products of
best return.  At this point, milk is being diverted away from
butter/powder and directed towards cheese and whole milk powder
production.  Due to slow sales, much of this product is entering
inventory programs.


EASTERN OVERVIEW:  The milk production season in Eastern Europe
continues to build toward seasonal peak levels.  Output in the region
typically lags Western Europe by a few weeks.  Manufacturers and
handlers indicate that sales activity is slow, especially for
international needs, thus current production is predominately entering
inventory.  Traders state that some small-lot sales are occurring, but
are no way near sales trends of past years at this time of the season.

0930c steve Schneeberger  (608)250-3204

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STAT News Service