European Dairy Market Summary

MADISON - Sep 2/10 - 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:  The milk production season in Europe continues to
edge lower.  Although the season got off to a slow start, milk
deliveries quickly increased and, for many countries, output is
running ahead of last year.  Milk output is strong in Germany,
France, the UK, and Ireland by as much as 3% over last year, while
overall output for Europe is slightly below last year by 0.1% for the
first half of the year.  Manufacturing facilities remain quite busy
processing the good volumes of milk available to them at this time of
the season.  Within the past few weeks, milk logistics are being
redirected toward products of more need or better return.  Casein
production is one commodity that is feeling the squeeze.  Traders and
handlers are stating the European holiday/summer vacation season is
about over and buying interest is starting to resume.  For the most
part, this buying interest is internal with international sales still
limited.  Suppliers and handlers of manufactured dairy products
indicate that stocks are available for immediate and future needs.
Russian buyer interest continues but has slowed from previous weeks.
Traders feel that the slow down in this demand is occurring due to
prices often higher than buyers desire to pay, thus they are looking
beyond European borders for potential stocks.  Traders and handlers
do feel that international buyer interest will increase soon as
buyers are now assessing their upcoming winter needs.  On August 26,
the Dairy Management Committee had their first meeting since late
July and following the summer holiday period.  No significant dairy
issues were discussed or adjusted.  Common refunds remained at zero
and no tendered refunds were offered.  Since March, the opening date
of the current intervention year, no butter or skim milk powder has
cleared to the program.  Also no butter or skim milk powder was sold
back to the trade from intervention inventories.  Traders and
handlers are evaluating the midweek results of the recent
global/Dairy Trading event in New Zealand which realized sharply
higher prices.  European traders continue to use this auction as a
market indicator versus a market setter.  Many traders felt that a
bottom to recent weakness might be at hand and firmness would soon
occur and this played out at the trading event.  Overall prices for
European stocks are mixed.  The Euro has weakened against the U.S.
dollar over the past few weeks, but pricing indices have often
firmed.  Traders state that often prices start to firm as the milk
production season and manufacturing schedules decline.

EASTERN OVERVIEW:  The Eastern European milk production season
continues to wind down.  Reports indicate that overall milk output in
this region is trailing last year, although the decline is getting
narrower.  Manufacturers and handlers state that stocks are available
for both internal and international buyer interest.  Traders indicate
that internal buyer interest is resuming and that international
buyers will hopefully be returning to the marketplace in the near
future to secure stocks for upcoming winter needs.


0930c steve Schneeberger (608)278-4154

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STAT News Service