European Dairy Market Summary

MADISON - Jun 21/07 - 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 trends in Europe continue to edge
lower, but not at any significant rate.  Milk producers and handlers
indicate that temperatures are moderate for this time of the season
and moisture is sufficient to maintain good pasture growth.
Competition for declining milk volumes remains very aggressive.
Demand for all manufactured dairy products is strong, both internally
and internationally.  Strong demand for all products has plant
managers trying to direct milk towards products of most need or best
return.  Butterfat has tightened quickly, thus butter/powder and whole
milk powder output are often in direct competition.  Effective June
15, the European Dairy Management Committee removed the balance of
export subsidies.  Cheese and butter were the two commodities that
still had subsidies.  Subsidies were put in place in 1968 to ensure
European dairy products remained competitive throughout the world.
Subsidies have been in place at various rates during that time, but
never before have all subsidies been removed.  The EU commission
indicated that they would continue to monitor the market to decide if
the refunds may again be necessary in the future.  Many traders and
handlers feel that the subsidies will be gone for at least a year or
until the current firm price and limited supply situation settles
down.  An Algerian tender for various dairy products was acknowledged
within the past two weeks.  About 20,000 MT of various European dairy
products were committed to this tender for July/August delivery.
Traders and handlers feel that Algeria might return to the market in
September looking for additional volumes.  Outside of this tender
activity, international sales continue to be reported, although sales
volumes are considerably lighter when compared to previous years at
this time.  As has been the situation for much of the spring,
available offerings are often priced higher than a previous sale.
Some higher offering prices for various products are taking suppliers
out of the market at this time.  Tight butter supplies have buyers
trying to cover second half of the year needs with little result.


EASTERN OVERVIEW:  Milk production in Eastern Europe is holding at or
slightly below seasonal highs.  Weather conditions up to this point
have been quite favorable, conducive to positive milk output.  In
recent days, temperatures have started to increase which could
accelerate the decline if this trend persists.  As in Western Europe,
milk volumes are quite competitive.  Strong demand for manufactured
dairy products is causing plant managers at some locations to juggle
milk receipts to their best advantage when possible.  Lighter than
desired levels of stocks are available for immediate or future needs.

0930c steve schneeberger  (608)250-3204

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STAT News Service