European Dairy Market Summary

MADISON - Jun 7/07 - 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 is reported to be about
0.5 - 1% ahead of last year at this time.  Quite favorable weather
conditions are now being reported which is encouraging good production
at basically seasonally high levels.  Some milk handlers are
indicating that milk receipts are starting to drop off somewhat, but
currently not at an accelerated pace.  Most feel that if temperatures
warm soon, declines could occur quickly.  Although milk volumes are
slightly ahead of last year, competition for milk is very aggressive.
Strong powder markets, both internally and internationally are
pressuring plant managers when possible to divert milk away from some
manufactured products toward milk powder.  In instances, products such
as casein are being produced on an order by order basis, thus freeing
up milk for powder production.  International demand for most all
manufactured dairy products is strong.  Often, buyers are reluctant to
be paying the higher prices, but also realize that prices will
probably not decrease in the foreseeable future and limited supplies
might become even more limited if they wait.  Traders continue to
report that a major buyer will be coming forward with a sizable tender
for various dairy products in the near future.  Most feel that a
significant portion of this tender will be filled from Europe, but
also state that they do not see Europe being able to fully fulfill the
request.  Firm prices continue to be reported for all products, with
some prices jumping quite sharply within the past two weeks.
Suppliers and handlers indicate that the international supply
situation remains limited and milk production trends throughout the
world are not overly positive.  In New Zealand, output during the
season just competed ran 3% ahead of last year while output in
Australia is projected to be 7% behind last season.  Argentina's
output is 12% less, Europe's production is about even and the U.S. is
still ahead of last season, but not by margins realized last year.


EASTERN OVERVIEW:  Good weather patterns is most Eastern European
countries are encouraging steady milk production patterns.  Although
most manufacturing plants are running at peak levels, competition for
milk volumes is active for products of best return.  Often within
individual plants, these decisions are difficult to manage and agree
upon.  Stocks of dairy products are available, but not at levels that
are typically associated with this time of the year.  Sales are being
reported, but are often smaller volumes than usual for this time of
the season.  Traders and handlers state that buyers often have a
specific dollar amount that they can spend at this time and are
realizing less product for that money.

0930c steve schneeberger  (608)250-3204

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STAT News Service