European Dairy Market Summary

MADISON - Jan 4/07 - 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 at seasonally low
levels.  Milk handlers indicate that it will not be too long before
they will start to realize increased milk volumes as the new milk
production season resumes.  As far as product availability and prices,
little has changed since prior to the yearend holiday period.  Stocks
remain in close balance and limited for any significant buyer
interest.  International buyers are now returning to work after the
various holiday periods throughout the world and are now reviewing
their product needs.  International traders are questioning product
availability.  Stocks of dairy products in the Southern Hemisphere are
basically fully committed with milk production in the Northern
Hemisphere on the eve of a new season.  A quota milk production system
and an increasing internal/domestic demand in Europe will limit
product availability from this region, while U.S. availability is
limited for their own internal/domestic need.  Most traders feel that
prices will remain firm for at least the first half of the year or
until a better supply situation picture develops in relationship to
international buyer interest.  Early in the new year, no significant
buyer interest is being reported, but many traders feel that the
absence of buyers for quite some time should stimulate buyer interest
soon.


EASTERN OVERVIEW:   Few changes out of Eastern Europe are being
reported.  Milk production continues to hold steady at seasonally low
levels.  Inventoried stocks of manufactured dairy products continue to
decline.  Traders and handlers state that some stocks would be
available for potential buyer interest, but not significant enough to
fulfill a large purchase.  Eastern producers and handlers are
optimistic about the upcoming production season and look forward to a
positive milk production season.  As of January 1, 2007, Bulgaria and
Romania have now joined the EU 25 making the group EU 27.  Dairy
traders and handlers indicate that it is still too early to speculate
on how these two new countries will impact the dairy picture.

0930c steve Schneeberger  (608)250-3204

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STAT News Service