European Dairy Market Summary

MADISON - Dec 6/07 - 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 is mixed as output reaches
low seasonal levels for most, with some milk handlers reporting slight
increases from previous low levels.  Wet conditions and warmer than
usual temperatures are being reported in many areas of Europe.  Milk
handlers state that milk volumes are probably at seasonal low levels
with increases becoming more of a trend.  Manufacturers and handlers
state that favorable milk prices should encourage milk producers to
ramp up output earlier than usual if they can.  At this point of the
season, milk volumes are being diverted away from butter and milk
powders and directed toward cheese output.  In many countries within
the EU 27, milk production is below quota levels, thus expansion room
is available.  Recently, talk and proposals are being readied to
increase the milk quota for the upcoming quota year (April 2008 -
March 2009) by 2%.  Milk producers and handlers anticipate that during
an upcoming Dairy Commission meeting, such consideration may be
discussed.  Many feel that an increase of 2% and continued favorable
milk prices will start to provide for the lack of milk that was
realized in the marketplace this current year.  Overall, prices for
European dairy products are trending lower.  Stocks are available but
buyers, especially internationally, are taking a wait and see attitude
before entering the marketplace.  The recent Algerian dairy product
tender continues to be a mystery to many dairy product handlers and
traders.  No one has a good feel on the total volume or source of the
supply.  Most feel that near term shipments of product will probably
come from Europe with subsequent shipments (February/March) possibly
coming from the U.S.



EASTERN OVERVIEW:  Milk production continues to decline or is holding
at low seasonal levels.  Manufacture of dairy products in Eastern
Europe is at seasonal levels, although some operations are taking
advantage of the additional late season milk volumes and remain open.
For those that continue to generate stock, they indicate that supplies
are available for immediate and near term needs.  Buyer interest is
slow as many buyers take a wait and see attitude before entering the
marketplace, especially as prices continue to decline.  Some traders
and handlers feel that prices might fall further is sales do not
develop.

0930c Steve Schneeberger (608)250-3204

---

STAT News Service