European Dairy Market Summary

MADISON - Aug 30/07 - 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 patterns throughout most of Europe
are following trends of past weeks.  Wet and cooler weather patterns
are being reported in most northern areas of Europe, while hot and dry
conditions are being reported in southern regions.  Milk production is
declining slowly in most areas with a noticeable decline in the hot
and dry areas.  Even in the favorable production regions, production
continues to trail market opportunities.  Demand for milk for both
drinking and manufacturing needs is tight and very competitive.
Competition for milk, especially at this time of the season, is
strong. Demand for milk powders remains strong.  Earlier in the
season, milk powder production was pulling milk away from other
manufactured products due to the strong demand and positive returns.
As the milk production season winds down, cheese demand is picking up.
Although butter/powder supplies are short of full needs, some milk is
clearing back to the cheese side to generate inventories for the
upcoming winter needs.  Traders and handlers report that buyer
interest for cheese for the upcoming winter season is strong.  Butter
supplies in Europe remain short of full needs.  Some European traders
and handlers continue to bring 80% and 82% (unsalted) butter into the
region for both domestic and trans-shipment needs from the United
States.  Butter stocks, held in PSA for at least 90 days, are now
entering the market.  Skim milk powder markets remain firm, although
prices have stabilized.  Much of the stabilization comes from the fact
that there is no product for sale.  The whole milk powder market is
firm and prices are increasing.  Much of the current strength is
coming from competition for butterfat.  Traders and handlers state
that if they want whole milk powder, they will need to pay higher
prices for manufacturers to generate needed volumes


EASTERN OVERVIEW:  Milk production in Eastern Europe continues to edge
lower seasonally.  Weather patterns are quite favorable for this time
of the season, thus significant declines are not being reported.
Stocks of manufactured dairy products remain lower than desired by
most manufacturers and handlers.  A significant portion of current
year production is being absorbed by an internal market with much
lighter surplus volumes available for an international market than
previous years.

0930c steve schneeberger  (608)250-3204

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STAT News Service