European Dairy Market Summary

MADISON - Sep 3/09 - 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 continues to edge lower with some areas of Europe
experiencing hot temperatures which are reducing milk volumes at a
more rapid rate. This reduction is milk output is causing demand for
milk to be very aggressive.  During the most recent Dairy Management
Committee meeting on September 3, all export refund levels were
unchanged.  Clearances of butter and skim milk powder to intervention
have slowed greatly now that commercial pricing is higher than
intervention levels.  During the past week, 64 MT of butter and 3800
MT of skim powder have cleared to the program.  This brings the total
for butter to 83,222 MT and skim milk powder to 281,533 MT.
Clearances of butter to PSA have also slowed greatly and holdings
total 134,606 MT.  Butter is now moving back out of PSA, but is
basically fully committed, thus doing very little to alleviate a tight
butter supply.  Prices for most manufactured dairy products are
higher.  Many European traders were surprised at the strength that
whole milk powder, traded within the globalDairy trading event,
realized earlier this week.  Many question if the 24% price strength,
compared to the previous event, will be maintained.

EASTERN OVERVIEW:

Milk production continues to trend lower seasonally.  Some of this
trend is occurring due to warm temperatures for this time of the
season, while most declines are typical.  Traders and handlers
indicate that they have product available for potential sale, but
butter is in the tightest position.  Sales are reported to be slow.

0930c steve Schneeberger  (608)250-3204

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STAT News Service