European Dairy Market Summary

MADISON - Oct 26/06 - 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 throughout most areas of Europe is
reported to be at seasonal low levels.  Some areas continue to report
fluctuations around this low level, but for the most part, milk
handlers indicate that there is no other direction to go except back
up.  Milk supplies are referred to as tight, especially by powder
producers even though this is the time of the year when powder
production is the lowest.  Powder production has been low all season,
thus powder producers are basically commenting this way because they
have done without for the whole season.  Stocks of powder continue to
be priced higher than international buyers are willing to pay, but
basically European sources do not have any to sell.  European traders
report that a skim milk powder sale has occurred in recent days with
the majority of this powder being sourced from North and South
America.  This has been the first significant sale in many many weeks.
As for other manufactured European dairy products, stocks are limited
for international buyer needs with most sales activity centering
around an internal or domestic market.  Often prices are increasing on
nominal sales activity.  Traders and handlers indicate that supplies
will remain limited for the balance of the winter and prices will
remain firm.  Most are hopeful that the new milk production season
will resume on a positive level and manufacturers and handlers will
once again be able to establish a better supply base for both domestic
and international buyer needs in 2007.

EASTERN OVERVIEW:   Milk production in Eastern Europe is also nearing
seasonally low levels.  Winter feed supplies are reported as mixed as
supply and quality varies from country to country.  Late season
pasture conditions are reported as fairly good which will help extend
the winter feed supply.  Stocks of manufactured dairy products are not
heavy by any means and basically sufficient for internal or domestic
buyer interest.

0930c steve Schneeberger  (608)250-3204

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STAT News Service