European Dairy Market Summary

MADISON - Mar 29/07 - 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:  The European milk production season continues to
increase.  Usually by this time, pastures are in pretty good shape and
grazing has resumed.  This year, cool nights with sunny days and
plenty of moisture, is limiting pasture access, thus the increase is
not developing as positively as forecast.  Producers indicate that
pastures need to dry somewhat before cows are allowed to graze.  The
end of the milk quota year is March 31.  This year, a few countries
such as Italy, The Netherlands, and Austria will again be facing
excess production, thus marketings during the final days of the year
are being adjusted.  Reports indicate that more countries are going to
be at or very near quota levels with no adjustments needed.  During
the 2006 - 2007 quota year, various countries realized an increase in
their quota volumes while in the 2007-2008 quota year, 11 countries
will realize a 5% increase.  The market situation in Europe is firm
prices and a limited volume of available stock.  Much of the early
season's production is fully committed with delivery of this
commitment occurring during April and May.  Beyond that point,
manufacturers are less willing to commit as heavily as they have
during the previous two months.  International buyer interest remains
very strong for available stock throughout the upcoming production
season.  The European food industry is in direct competition with the
international buyer for available product.  Although prices for
manufactured dairy products are increasing, buyers are reluctantly
paying the price.  Domestic and international buyers both indicate
that they need the dairy component in their product formulation to
maintain their production schedules or basically cease operations.
Since intervention has been open, March 1, no butter or skim milk
powder have been offered.  Most producers and handlers feel that
offerings will be minimal, if any at all during the current open
season.  Butter producers are gaining confidence in PSA offerings
instead.  Many traders and handlers state that previous intervention
offerings are  declining and these stocks will be depleted by the end
of April.


EASTERN OVERVIEW:  Eastern European milk production continues to hold
near seasonally low levels, although some reports are starting to
indicate a seasonal increase.  Production in this region usually
trails Western European development by about 4 weeks.  Some sales
activity is being reported from this region as domestic and
international buyers aggressively seek potential sources for their
needs.

0930c steve Schneeberger  (608)250-3204

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STAT News Service