European Dairy Market Summary

MADISON - Nov 22/06 - 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:  The milk production picture in Europe is little
changed from recent weeks.  Output is at seasonal low levels as the
milking herd enters the winter season.  Pastures have basically ceased
nutritional value, thus farmers are reaching into winter feed stocks.
Milk volumes are minimal as manufacturing schedules are limited and
available milk volumes are clearing through drinking milk facilities.
Stocks of manufactured dairy products vary, but are generally in close
balance with an internal or domestic demand.  Some stocks are reported
to be available for international buyers, but limited volumes and
prices often higher than buyers are willing to pay are limiting sales
activity.  Traders state that hesitant buyers need to make a decision
about paying the higher asking prices or going without.  International
buyer interest is reported to be occurring, but limited supply and/or
high prices are limiting sales activity in many regions of the world.
Following the announcement last Thursday at the Dairy Management
Committee meeting in Brussels, European traders and handlers are
analyzing what impact the 40% reduction in refund aid for whole milk
powder and a 13% reduction in cheese aid will have on future prices.
Most feel that this reduction will only further firm European priced
dairy products for international sale.  These adjustments are having
little impact on current sales since they are limited, but question
the impact during the upcoming milk production season.  The next
Management Committee meeting is scheduled for November 30.

EASTERN OVERVIEW:   Milk output in Eastern Europe is basically at
seasonal low levels.  Producers indicate that production will remain
low until February/March when seasonal increases will resume.
Manufactured dairy product stocks are reported to be in balance with
an internal or domestic need.  No significant sales activity is being
reported out of this region at this time.

0930c steve Schneeberger  (608)250-3204

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STAT News Service