European Dairy Market Summary

MADISON - Jul 20/06 - 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 Europe is lower.  This is typically
the direction output is in at this time of the year, although at this point,
production is declining quite rapidly as hot temperatures are being reported
throughout Europe.  Rainfall in Europe has been spotty, thus some areas are
nearing or at drought conditions.  Lack of moisture is limiting pasture
growth, also impacting milk production patterns.  Dry conditions have farmers
questioning feed supplies and availability for upcoming winter needs.
International buying interest for manufactured dairy products remains slow.
Traders and handlers indicate that powder volumes are basically in balance for
domestic needs, with minimal amounts available for potential international
buyer interest.  Some traders feel that European demand might even surpass
European supplies, thus imports may be needed to fill all needs.  Butter
stocks continue to run well ahead of last year at this time, with production
edging lower as milk and cream volumes decline.  At the July 13th EU Dairy
Management Committee meeting, minimal changes to refunds were reported.
Butter continues to be offered to intervention, but accepted volumes are
declining.  In the third and most recent round of tendering, 1,520 MT of
butter were accepted out of offerings totaling 2,330 MT at about 89% of the
current intervention level.  Since March 1, 54,620 MT of butter have cleared
to intervention at a fixed price with another 6,235 MT of butter clearing
through the tendering system.  The next Committee meeting is scheduled for
July 27th.

EASTERN OVERVIEW:  Milk production in Eastern Europe is also being
impacted by hot temperatures and humid conditions.  Thus far this
season, milk output has not attained levels of last season, thus
accelerated declines at this time will only further limit manufactured
dairy product supplies.  Traders and handlers state that stocks are
lower than usual for this time of the summer which has some producers
concerned.  At this point, international buyer interest remains light.
 Some traders feel that they may not have sufficient volumes to fill
potential buyer interest.

0930c steve Schneeberger  (608)250-3204

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STAT News Service