European Dairy Market Summary

MADISON - Oct 25/07 - 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 intakes continue to decline seasonally in
Europe.  EU milk quota levies are down 38 percent from last season
with seven countries facing fines totaling 221 million euros.  Italy
had the largest share of the fines to pay.  It appears that milk
producers have yet to respond to higher producer milk prices.
Supplies of hay and silage for winter feeding are in good shape though
concentrate costs are very high.  Milk supplies are being allocated,
and in instances, reallocated to make the products in the biggest
demand and with the best returns.  More milk is being switched to the
production of consumer products for internal EU consumption for the
upcoming holiday season.  More butter continues to leave private
storage for the typically stronger fall/holiday sales season.  Cheese
supplies are tight and inventories are generally light.  Overall dairy
product supplies are lower than recent years.  Some manufacturers are
starting to offer quantities of product for export after previously
being afraid to make commitments due to availability concerns.  Butter
continues to be imported; both for further processing and/or for re-
export elsewhere.  Currently, world prices for many dairy products
traded seem to be just below EU prices though the gap seems to be
narrowing.  There is a lot of international interest from other
sources for product delivered in the first quarter of 2008.  Russian
demand is returning to the market.



EASTERN OVERVIEW:  Milk production continues to trend lower
seasonally.  Smaller quantities of products are available for export.
Some buyers continue to balk at current price offerings.  Some milk
supplies are being shifted to produce consumer products for the
holidays.

0930c George Koerner 608.250.3205

---

STAT News Service