European Dairy Market Summary

MADISON - Aug 31/06 - 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:  European milk production continues to decline
seasonally.  The weather has been cooler and frequently wet recently
and temperatures are more seasonal.  Overall milk production is likely
to remain lower than a year ago for the season.  Recent heat reduced
milk volumes and manufactured product supplies available for export.
The final results for the butter invention stocks will not be
available until September since the season closes August 31.  However,
reports indicate that around 4000 tons of older butter was sold from
inventory recently.  Butter prices may have hit the bottom and reached
a level of support internally.  The recent hot spell caused a sharp
reduction in fat tests and tightened cream and fresh butter supplies.
 With a continued push towards cheese production over other products,
skim production continues lower, reducing supplies and adding to a
firm domestic market.  International interest is likely looking
elsewhere to source skim supplies due to price.  The whole milk market
is firm with some African demand noted for generally smaller
quantities.  The EU commission recently announced that skim milk
exporters no longer need to apply for a refund (export license) since
no refunds are being made, though it applies only for skim.


EASTERN OVERVIEW:  Temperatures have moderated after the recent heat.
The declines in milk receipts seem more noticeable in Eastern European
countries, particularly in the Baltic region.  The reduction in milk
receipts has impacted the volume of manufactured products produced.
This will reduce the overall volumes available for sale both
internally and the export market.

0930c George Koerner 608.250.3205

---

STAT News Service