European Dairy Market Summary

MADISON - Oct 9/08 - 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 output across most of Europe continues to
decline towards seasonal low levels with many countries reporting no
to slight gains when compared to year ago levels.  The growth rate has
slowed in recent months.  The biggest gains versus a year ago are in
the Netherlands; while the UK is reported to be having the largest
declines.  Milk supplies continue to be available for processing with
plants making products that they have orders on the books.  Production
of most dairy products is declining and is tracking milk availability.
 Demand for dry dairy products has trended lower.  There are concerns
about Government Dairy Price Support purchases of NDM in the United
States beginning and international traders/buyers are assessing what
effect lower prices in the U.S. will have on international prices.
Major economic declines in most major international stock markets,
fluctuating currencies, and unsettled consumer confidence, are all
creating uncertainty in world demand.  Few developments are taking
place for producers/traders hoping to place supplemental product into
China.  There are some speculative purchases, but overall volumes are
light.  An export tender was announced and bids were taken to buy SMP
and WMP.  The unsettled world markets will likely affect prices and
quantities.  Butter and butteroil demand are trending lower as fresh
stocks are available for packaged sales and PSA butter is moving to
fill in manufacturing needs.  Offerings of cream are widely available.

EASTERN OVERVIEW:  Eastern Europe milk production ranges from steady
to mainly lower.  Conditions have tended to make milk output slow.
Processing schedules are often lower to accommodate the declining milk
supplies.  Product movements into international markets have slowed
and pricing is often under pressure.  Domestic orders are moving along
projected levels.

0930C  Butch.Speth@usda.gov  (608)250-3202

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STAT News Service