European Dairy Market Summary

MADISON - Sep 14/06 - 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 continues to decline
seasonally.  Overall, production is trailing last year, although
output in Germany is reported to be on track with last season.
Weather conditions are typical for this time of the year, warm days
and cool nights.  Moisture conditions are mixed, although generally in
good balance.  Constant rainfall in recent weeks in many regions of
Europe has subsided and pasture conditions are drying and grass growth
is reported as good for this time of the year.  Milk handlers state
that most manufacturing facilities would welcome more milk as demand
for manufactured dairy products is strong.  A significant portion of
this strong demand is from internal or domestic buyers.  International
trading activity is limited due to minimal stock available for this
market.  Also limiting international buyer interest is firm pricing,
especially for skim milk and whey powder.  International butter demand
has slowed as Ramadan begins next week, although domestic butter
demand has improved and prices are firming.  Available stocks of
butter are limited as about 60,000 MT of butter cleared to
intervention during the open season.  Clearances to PSA were not as
heavy as previous years, and current churning is lighter as milk
volumes are tight.  Traders and handlers indicate that skim milk and
whey powder demand are strong and prices are on the increase.  Much of
this tightness is being attributed to lower milk volumes and
management decisions by manufacturers to adjust their production
schedules during the current milk production season.  Some traders and
handlers indicate that European produced dairy products are becoming
only sufficient for an internal or domestic market and international
participation will continues to decline.


EASTERN OVERVIEW:  Milk production conditions in Eastern Europe are much the
same as in Western regions.  Reports continue to indicate that overall milk
volumes are lighter than last year at this time.  Lower milk volumes are
slowing manufacturing schedules throughout the region.  In many instances, new
product production is not on pace with previous years thus stocks are less
available for domestic needs and especially international markets.

0930c  steve Schneeberger  (608)250-3204

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STAT News Service