European Dairy Market Summary

MADISON - Jun 5/08 - 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 fluctuate at strong levels.  Some reports indicate that
milk output during April was steady with the previous year, while milk
volumes in May were higher.  Cool/wet conditions early in the spring
slowed pasture growth, thus grazing occurred later than usual.  Milk
producers and handlers remain very optimistic about the current
season.  Much conversation is centering around the German milk boycott
and the impact this is having.  Farmers are protesting low pay prices
and are withholding milk from the market by feeding it to their
younger cattle or dumping.  The milk strike has now been in effect for
over a week and retailers are now starting to feel a squeeze.  Milk
shortages are being reported by more retailers.  Some retailers have
been warning customers not to rush out to buy milk.  Some grocery
operations indicate that supplies are tightening, but also state that
they are hopeful that they will be able to redistribute milk volumes
from less affected areas to areas of greater need.  All in all, most
European traders and milk handlers state that the German milk strike
will probably have minimal negative impact outside of Germany.
Traders and handlers state that Germany is a major milk producing
country and if the strike continues for an extended period of time,
manufactured dairy products, usually sourced from Germany, will
probably be less available.  Traders and handlers also state that
fluctuating currency values are making trading activity challenging.
Some state that it is not unusual for dairy commodities to fluctuate
100 Euro dollars or so from one day to the next.  Although milk
production is positive, inventory levels of manufactured dairy
products are often referred to be in tight balance.


EASTERN OVERVIEW: Milk production trends in Eastern Europe continue to
develop on a positive basis.  Some handlers are stating that volumes
are at or very near peak levels with some indicating that slight
declines are occurring.  Milk volumes are fully sufficient to generate
good levels of inventory for both internal and potential international
buyer interest.  At this time, most sales activity is centered around
domsetic needs with international sales minimal.

0930C  steve Schneeberger  (608)250-3204

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STAT News Service