European Dairy Market Summary

MADISON - May 22/08 - 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 in most parts of Europe
continue to bounce around at seasonal high levels.  Output was strong
during the first three months of the year with lower volumes being
reported in April.  In May, receipts rebounded as the cold/wet
conditions in April disappeared and cows were able to graze on green
pastures once again.  Typically, milk production peaks in May and
volumes trail off from that point.  This year, producers and handlers
are projecting that this trend will once again develop, but also pay
prices for June and July milk will be lower.  Lower pay prices,
coupled with increasing feed costs may encourage some farmers to cut
back on milk output.  Manufacturing facilities are operating at or
very near peak levels.  In many instances, manufacturing facilities
were not overly burdened with milk volumes during the current
production season and were able to process most of the milk in an
orderly fashion.  Butter and milk powder output continue to absorb the
leading portion of available milk volumes with cheese production
picking up the balance.  Due to lighter than usual spring cheese
production, whey volumes are less available and prices are increasing.
 Prices for other manufactured dairy products are holding steady or
increasing.  Stocks are being generated for current and future use,
although they are lighter than desired by many.  Surplus butter stocks
continue to clear to PSA.  For the period February 1 - May 11, 76,872
MT of butter have cleared to PSA which compares to 48,369 MT for the
comparable period in 2007.  The European Commission is looking at
adjusting various EU common agriculture policies seeking to better
control cash payouts.  Proposals are receiving various degrees of
support and opposition as the proposals are voiced and discussed.  A
dairy issue that will be voted upon later in the year will be to
increase milk quotas by 1% each year for the next five years beginning
April 1, 2009.  This is half the increase enacted on April 1, 2008.


EASTERN OVERVIEW: Milk production continues to increase in Eastern
Europe.  Producers and handlers are realizing a strong positive start
to the current season.  Favorable weather and moisture patterns are
encouraging steady production growth.  Sales are being reported for
internal or domestic needs with international activity minimal.

0930c steve Schneeberger  (608)250-3204

0930C

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STAT News Service