European Dairy Market Summary

MADISON - Sep 13/07 - 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:  European milk production continues to decline
seasonally.  In most areas, the decline is gradual with no significant
drops being reported.  As has been the case for most of the current
season, milk volumes remain insufficient for total needs.  As the milk
production season winds down, when possible, milk is being directed
toward cheese output.  Cheese demand is strong and supplies are
limited for winter buyer interest.  Traders and handlers state that
international buyers are in the marketplace looking for stocks for
upcoming needs, but are finding that European sources basically have
little to offer.  Butterfat in Europe is tight and traders and
handlers continue to look to outside sources for supplemental needs.
In most instances, the United States is the source for these
supplemental butter stocks.  PSA butter stocks are now returning to
the marketplace after being held in the program for at least 90 days.
Although these stocks are entering the market, volumes are
insufficient in relationship to demand.  Stocks of other manufactured
dairy products are available, but much lower than desired.  The
strong, record setting since the launch in 1999, Euro against the
dollar at 1.3906 on Wednesday is pushing prices higher.  Traders and
handlers state that they look for further strength in the Euro, thus
prices may trend even higher.  As the winter season approaches,
European traders and handlers indicate that they do not foresee any
change in European stock levels that would encourage international
buyers to look to this region for potential needs.  Internal EU demand
is growing, thus limiting available supplies for a potential
international buyer.


EASTERN OVERVIEW:  Little has changed in Eastern Europe over the past
few weeks.  Milk production continues to edge lower seasonally as
weather conditions, although wet, are not having a significant
negative impact on milk volumes on the down side of the season.
Stocks remain lighter that desired when compared to previous years.
Traders and handlers indicate that small lot sales are occurring, but
no significant volumes are clearing the region.  Lack of supply and
firm prices are both limiting factors for sales at this time.

0930c steve schneeberger  (608)250-3204

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STAT News Service