European Dairy Market Summary

MADISON - Oct 11/07 - 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 decline
seasonally.  Reports indicate that milk production appears to be below
quota levels in most EU countries with France running heavier.  Milk
handlers in some of these countries feel that below quota level
countries will probably make up this deficit with the start of the new
milk production season before the end of the current quota year, March
31, 2008.  Some milk handlers attribute the lack of milk volumes to
high feed concentrate costs.  Stocks of manufactured dairy products
are lighter than desired, although some traders and handlers report
that volumes appear to be building as high prices are curtailing sales
both internally and internationally.  Many traders are awaiting the
issuance of a tender by an international buyer in the coming days.
Many feel that Europe will not be able to fully fill the inquiry, but
may be able to commit to some near term or immediate needs.  Butterfat
continues to be limited in Europe, thus imports continue.  Some of
this butter is entering Europe under import guidelines.  Other volumes
are entering Europe, but are further refined and then shipped back
out.  Conversations about increasing milk quota levels continue to
circulate.  Traders and milk handlers state that increased quotas
would help alleviate the current supply/demand in balance.  Many feel
that no action will take place on this possibility until the 2008
Health Check is completed, if at all.

EASTERN OVERVIEW:  Milk production in Eastern Europe continues to decline
seasonally.  Stocks of manufactured dairy products in this region are
often lighter than desired.  Traders and handlers indicate that stocks
are available for immediate or near term needs, but often not at price
levels that buyers are willing to pay.  Some traders indicate that
stocks appear to be more available than they have been for much of the
summer and attribute this to slower sales due to firm prices.

0930c steve Schneeberger  (608)250-3204

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STAT News Service