European Dairy Market Summary

MADISON - Aug 17/06 - 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 moderated and rainfall is
occurring in most of Europe.  These more favorable weather patterns,
in comparison to the hot and dry conditions of a few weeks ago, are
helping declining milk production to stabilize.  Milk producers and
handlers state that some recovery is occurring, but most feel that
production losses will not recover fully.  Current weather conditions
are also favorable in that parched pasture conditions are recovering.
Throughout most areas of Europe, cumulative milk production volumes
are trailing last season.  This has been the case for the season thus
far and most milk handlers do not foresee much hope for production
gains as the season winds down.  Competition for milk volumes is
strong as manufacturers generate product for basically an internal
demand.  Fluid (drinking) milk demand has been slow during the summer
holiday period, but is expected to increase as this season comes to a
close.  International buyer interest is reported as slow as many
traders and handlers indicate that supplies are not that readily
available and often priced higher than buyers are willing to pay.
Most sales at this time are centered around an internal or domestic
market.  Skim milk powder and whey prices are firm with most other
prices holding steady.  Intervention for butter remains open until
August 31 for those countries still eligible, Spain, Portugal,
Ireland, and Poland).  Under the most recent tender, about 800 MT of
butter were accepted into the program at around 2300 Euros (89% of the
intervention level).  There will be one more tender before
intervention closes at the end of the month.

EASTERN OVERVIEW:  Milk production in Eastern Europe continues to
decline and continues to trail last year's levels.  The hot and humid
weather conditions of a few weeks ago have eased and production
declines have stabilized.  Most milk handlers do not foresee much
recovery in milk volumes lost during the recent hot spell.
Manufacturing schedules are reflecting the decline in milk volumes.
Often, manufacturers are not able to maintain desired product
schedules due to lack of milk volumes.  Although production is lower,
most manufacturers indicate that they are comfortable with their
supply situation.  Most indicate that they do not have the inventory
level of previous years.

0930c steve Schneeberger  (608)250-3204

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STAT News Service