European Dairy Market Summary

MADISON - Apr 26/12 - 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 European milk production season is off to a strong start and some
milk handlers are projecting that peak output might only be 4 weeks
away.  Preliminary reports are indicating that milk volumes are
running 2.5 - 3% ahead of last year.  Some milk handlers are
indicating that cool temperature levels are hindering good grass and
pasture growth, thus when temperatures warm on a more consistent
basis, prepare for further production increases.  Heavy milk volumes
are arriving at manufacturing facilities and many operations are
already challenged to handle the milk flow.  In most instances,
churns, dryers, and cheese vats are nearly maxed out on capacity and
current output is far exceeding demand, thus clearances of
manufactured dairy products to inventory programs are heavy.  Traders
and handlers are reporting that sales activity is occurring, but is
slow as most buyers are cautious with their purchases and only
procuring for near term needs.  Pricing for most all dairy products is
steady to lower, thus buyers often step back from the marketplace
until prices stabilize.  The word intervention is starting to occur in
more conversations.  Traders and handlers feel that butter and skim
milk powder prices might ease to intervention levels if sales activity
does not occur soon.  The intervention price level for skim is 1,698
Euros per MT around $2,245 and the butter intervention level is 2,217
Euros per MT about $2,930.  Intervention price levels are established
by using a reference point of 100% for skim milk powder and 90% of
2,463.9 Euros for butter.  Many feel that if current prices weaken to
intervention levels that butter would probably be the first product to
dip that low.  The Dairy Management Committee met on April 19 and no
significant dairy related policy issues were addressed or changed.  At
the meeting, figures for 7 weeks of PSA, through April 15, were
released.  Since the first of March, 40,799 MT of butter have cleared
to the PSA program.  This volume is 15,000 MT more than last year's
figure of 25,294 MT figure for the same seven (7) week period.

EASTERN OVERVIEW:  Milk production trends in Eastern Europe appear to
be developing on a very positive basis with early reports indicating
that milk output is running as much as 9% stronger in many regions.
Although temperatures are also cool in Eastern Europe, milk output had
a good start to the season and continues to develop.  Stronger milk
prices are another factor that milk handlers point to that is probably
encouraging more output.  Eastern European traders and handlers are
reporting slow sales, both domestically and internationally.  Many
feel that weakening prices are the contributing factor to slow sales
activity.  Stocks of uncommitted manufactured dairy products in
Eastern Europe are being reported.
9:30c steve schneeberger   608-278-4154

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STAT News Service