European Dairy Market Summary

MADISON - May 24/07 - 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 appears to be holding
steady at seasonal high levels.  Milk handlers, especially in France,
indicate that the seasonal high is not quite at the level of previous
years.  They attribute this to lack of moisture during the crucial
milk production growth period of the season.  Within the past two
weeks, rainfall has been reported in most regions of Europe.  Pastures
have greened and favorable dairy grazing is once again occurring.
Milk handlers state that they are basically seeing a plateauing of
milk production at seasonal high levels.  Some slight declines are
occurring, but not at the levels that would have developed if rainfall
had not occurred.  Temperatures are seasonally pleasant, thus not
negatively impacting milk production trends. Manufacturing facilities
are running at or very near peak levels.  Some manufacturers continue
to discuss directing milk away from some products toward others, but
in most instances, these considerations are not occurring.  Although
milk production is at seasonal high levels, stocks of manufactured
dairy products are limited.  A strong internal demand within the EU is
absorbing more volumes of dairy products, thus limiting offerings left
over for international buyer interest.  In most instances, outside of
whey, limited additional supplies continue to push prices higher.
Traders and handlers report that an upcoming tender looking for milk
powders may be occurring in the very near future.  Most feel that the
potential volume of this tender will not be able to be filled from
Europe and traders question where full needs will come from.  The EU
Dairy Management Committee met on May 24 and butter export subsidies
were cut by a third from 750 Euros to 500 and butteroil from 936 to
624 per ton.  Cheese export subsidies were cut 28% with all changes
effective May 25.


EASTERN OVERVIEW:  Eastern European milk production continues to build
toward seasonal high levels which usually occur in June.  Up to this
point, lack of moisture has impacted milk production growth, but
recent rainfall has been reported which is greening pastures for the
grazing dairy herd.  Traders and handlers state Eastern milk producers
might be in a better situation than their Western counterparts in that
the moisture is occurring as their production continues to increase.
Stocks of manufactured dairy products are available, but much of
current offerings are clearing to internal or domestic needs.
Internal demand is increasing which is limiting surplus for outside
buyer interest.

0930c steve schneeberger  (608)250-3204

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STAT News Service