European Dairy Market Summary

MADISON - Sep 25/08 - 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 in Europe continues to seasonally
decline.  In recent days, temperatures have dipped to unseasonably low
levels.  Milk producers and handlers indicate that these temperatures
will not help late season production trends, but at the present time,
no significant reductions are being reported.  Overall milk production
continues to lag last year, although output in countries such as The
Netherlands and France is running stronger.  In Germany, milk output
is basically steady with last year, while milk production in Ireland
and the United Kingdom is trailing last season.  Milk volumes in
general are sufficient to keep manufacturing plants, that are still in
operation, running at favorable levels.  In most instances,
manufacturing schedules are declining at all locations, with some
operations cutting back on operation days.  Stocks of manufactured
dairy products are available for both domestic and international buyer
interest.  At the present time, buying interest is slow and
unaggressive as prices continue to decline at a steady pace.  Any
sales activity that is occurring is usually for short term or
immediate needs.  Traders and handlers speculate that buyers will
remain absent from the marketplace until markets stabilize.  Some
traders anticipate that a major tender for various dairy products
might soon be announced.  Traders and handlers are hopeful that they
may be able to get some of the tender volumes, but realize that
international prices for dairy products are often lower than European
prices.  Butter continues to exit the PSA program.  Although the PSA
program closed on August 14, some butter was still in transit into the
program, thus annual volumes were near the 160,000 MT level.  The 2008
open season (March 1 - August 14) total volumes compare to nearly
124,000 MT last year.

EASTERN OVERVIEW:  Milk output in Eastern Europe continues to edge
lower as temperatures decline in many regions.  Milk producers and
handlers indicate that lower temperatures are occurring earlier this
year than typically is the case.  Manufacturing schedules are
declining, although traders and handlers report that stocks are
available for both domestic and international buyer needs.  As is
occurring in most all markets, buyer interest is quiet.  Most feel
that weakening prices are the major factor at this time.  Many feel
that once markets stabilize, buyers will return to the marketplace for
fall and winter needs.

0930C  steve Schneeberger  (608)250-3204

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STAT News Service