European Dairy Market Summary

MADISON - Dec 21/06 - 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 continues to hold steady at
seasonally low levels.  At this point of the season, some milk
handlers indicate that it appears that milk output in various
countries is not as positive as in years past and quota levels might
not be attained.  Milk production has lagged previous years in many
countries this season, although with a basically mild winter thus far,
some recovery might occur as the new milk production season resumes in
February, before the quota year end in March.  Handlers and traders
are indicating that international powder demand is resuming.  Most are
not surprised at the interest, especially when one looks at the
international pool of supplies and finds that there really is no
powder available.  Firm prices in Europe have also limited sales in
the past, but now customers are realizing that if they want or need
the powder, they will have to pay the price.  European stocks are not
overly excessive, but small lot commitments are being reported.  At
the most recent Dairy Management Committee last week, the export
subsidy for whole milk powder was reduced by 100 Euros to 210.
Outside of this, no major changes have been reported for European
dairy products.  Intervention stocks of butter continue to clear back
to the market.  Thus far, about 10,000 MT of butter have cleared back
to the trade.


EASTERN OVERVIEW:   Milk production in Eastern Europe is also holding
steady at seasonally low levels.  Mild, early winter weather
conditions are conducive to sustained low output, but will help boost
early production growth during the upcoming new season.  Some Eastern
European traders and handlers indicate that international buyer
interest for milk powders is resuming.  Although inventories of powder
are lower than desired, some sales are being reported from the region.

0930c steve Schneeberger  (608)250-3204

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STAT News Service