European Dairy Market Summary

MADISON - Aug 16/07 - 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:  The European milk production season continues to
wind down.  Temperatures are fairly mild with at least no extended
periods of hot temperatures to accelerate milk production declines on
the down side of the season.  Milk production in France and Germany is
running ahead of last year with milk handlers in most other countries
reporting steady to slightly lower output.  Grass growth is good for
this time of the summer.  Favorable rainfall and cooler temperatures
are providing for pastures to be in better shape than usual.  Although
milk production is trending lower, milk volumes in late August or
early September often increase, or as some milk handlers state, a
second flush.  Granted, this increase is no where near the spring
flush, but often comes at a time when manufactured dairy product
inventories need a boost or customer needs increase prior to the
upcoming winter season.  European dairy product stock levels are often
lighter than desired.  Now that there are 27 countries in the EU, the
bounty of some countries is supplementing shortages in other, thus
limiting surplus volumes for an international market.  This year,
butterfat is in very tight supply and often European butter traders
and handlers are looking to outside sources for supplemental needs.
Reports out of the United States indicate that butter sales (both CWT
and commercial) are clearing to European destinations.  PSA for butter
closed on August 15.  In late July, 100,239 MT of butter were being
held.  As of August 16, PSA held butter is available to re-enter the
market as long as it has been in the program for at least 90 days or
offered before May 15.  A recent small sale of intervention held
butter has now cleared out intervention holdings.


EASTERN OVERVIEW:  Milk production in Eastern Europe is also on the
down side.  Some reports indicate that output in Poland is trailing
last season, while milk production in most other Eastern European
countries is comparable to the previous year.  Stock levels of
manufactured dairy products are often not at desired levels.  An
increasing internal demand and early season international sales have
reduced surplus volumes available for an international market.

0930c steve schneeberger  (608)250-3204

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STAT News Service