European Dairy Market Summary

MADISON - Jul 5/07 - 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 trend lower,
although weather conditions are conducive to a gradual decline at this
time.  Temperatures have been moderate and moisture has been
plentiful.  Pasture growth is good for this time of the season and
grazing remains positive.  With milk output on the down side, reports
indicate that output is trailing last year on a cumulative basis in
the UK, France, and Germany.  Demand for milk volumes continues to be
very competitive as plant managers try to align milk volumes with
products of most need or best return.  Currently, milk is being
diverted away from casein production which will limit product
availability for an international market.  Producers of milk powders
are trying to generate sufficient stocks for a strong internal and
international market.  In many instances, production is keeping pace
with internal needs, but falling short of international buyer
interest.  Traders and handlers state that since export subsidies have
been completely removed, prices for most products are higher.  A firm
Euro is also causing prices to increase.  Stocks of some manufactured
dairy products are limited to the point that some European suppliers
are looking to other markets for additional stocks.  Butter/butterfat
is one product that is in low supply.  Traders and handlers state that
butter stocks are at the lowest levels in recent memory.


EASTERN OVERVIEW:  Milk production in Eastern Europe has now peaked
and milk output is holding steady at high levels or starting to trend
lower.  Early reports indicate that milk output in this region has
been positive thus far this season and is running ahead of last year
at this time.  As in Western Europe, temperatures and moisture levels
in Eastern Europe are conducive to good production and pasture growth.
Although milk production is seasonally strong and active, stocks of
manufactured dairy products are not that heavy.  Handlers and traders
state that stocks are available for near term or smaller lot needs,
but lighter than desired for the peak milk production period of the
year.

1000c steve schneeberger  (608)250-3204

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STAT News Service