European Dairy Market Summary

MADISON - Apr 26/07 - 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 in Europe continues to build
towards seasonal peak levels.  Up to this point, conditions have been
favorable for a good start to the season, but in recent days,
temperatures have become more summer like versus spring like and
moisture is limited.  These conditions have manufacturers and handlers
questioning if anticipated peak production might not be attained.
Most feel that if the temperatures remain hot and no rainfall,
production could be in jeopardy.  At this point, manufacturing
schedules are at or very near peak levels throughout most of Europe.
Demand for all dairy products is strong from both internal and
international buyers.  Prices for most manufactured dairy products
continue to increase.  Powder prices continue to attain new record
highs on basically a daily basis.  Buyers and sellers continue to
question how high these prices will continue to go.  In most
instances, lack of supply is the strength behind current market
firmness.  Buyers are reluctantly paying the higher prices, but
realize that they at least have the product versus going without.
Most traders and handlers feel that the market will remain strong as
long as supplies are limited.  Buyers state that they need product,
thus any available supply is basically garnering a higher price.  The
Dairy Management Committee met on April 26.  At the meeting, the
export subsidy for butter was reduced by 7 Euros, from 82 to 75 Euros
per 100/KG and cheese subsidies remained unchanged.  A report
indicated that there were 46 MT of uncommitted butter left in
intervention warehouses.  Traders and handlers feel that this will
probably remain in intervention warehouses as the distribution is in
various warehouses throughout Europe.


EASTERN OVERVIEW:  Milk production continues to increase in Eastern
Europe.  Temperatures are not as warm as in Western Europe, although
lack of moisture also prevails.  Milk handlers state that as long as
temperatures remain moderate, the lack of moisture will probably not
have as much of a negative impact on milk output as it may in Western
regions.  Manufacturing schedules continue to increase absorbing
increasing volumes of milk.  Demand for manufactured dairy products is
strong and a large percentage of production is already committed.
Commitments for May and June deliveries are well established with
future commitments being cautiously made.

0930c steve Schneeberger  (608)250-3204

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STAT News Service