European Dairy Market Summary

MADISON - Mar 1/07 - 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:  Generally mild winter conditions continue over much
of Europe with some areas reported as the warmest in 300 years.
Scandinavian countries and Northern Germany recently had about a week
of much colder temperatures.  Milk production is increasing seasonally
with overall levels up 1 - 2% above last year in Europe and about 3%
in Germany as the end of the quota year approaches.  Only a few
countries are expected to be over-quota for the year ending March 31.
 Powder markets remain firm as international interest is still unable
to acquire desired volumes from other areas of the world.  Few expect
the tight supply and high prices to change significantly before fall
at the earliest.  Intervention and private storage for butter and skim
powder will start March 1 but few expect any early offers to
intervention to occur.  Some butter may enter the private storage
program despite recent announced adjustments to the program.  Fluid
companies are trying to increase retail milk prices as milk returns
are lower for fluid products than for some manufactured products as
fluid prices are only set once or twice a year.  With the exception of
some remaining whole milk volumes, there are no export refunds on
European powders.  Some cheese prices are under pressure due to the
additional of cheese plant capacity and subsequent increase in cheese
offerings in countries such as Germany.  This could also cause
manufacturers to look at other milk uses to maximize returns.

EASTERN OVERVIEW:  Overall Eastern European milk intake increases are still
limited until significant pasturing becomes available in about a month.
Polish milk production is increasing slowly but cow numbers are down from last
year, and combined with lower production per cow, the forecast for increased
milk receipts is not likely.  Cheese consumption continues to evolve in the
region, causing some milk supplies to shift away from products generally
produced for export.  Some supplies are still available for export but volumes
are dwindling rapidly.

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STAT News Service