European Dairy Market Summary

MADISON - May 10/12 - 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 nearing peak levels in most
areas, with some reports already indicating slight declines from
higher levels.  The buildup to seasonal peak levels has had a longer
run this season and thus peak levels are arriving or have arrived
earlier than usual.  Some milk producers and handlers are indicating
that colder/wet conditions have slowed production increases, but as
temperatures warm, are finding that a plateau in production occurred
and further growth is being reported at this time.  Although
temperatures have been cool, grass growth is very lush and plentiful.
Heavy milk volumes are providing plenty of milk for manufacturing
facilities to handle.  In most instances, manufacturing capacities are
at maximum levels, thus additional milk volumes will be challenging to
process.  Stocks of manufactured dairy products in Europe are heavy,
but most manufacturers and handlers are not overly concerned.  Sales
activity is being reported.  Traders and handlers are stating that
although prices are easing, some buyers are purchasing for needs 2 - 3
months down the road.  This hedge is occurring so that stocks will be
in place for needs at that time and new orders can be placed when
prices will probably be on the increase.  Much of the European and
international marketplace are awaiting the results of a recently
announced skim and whole milk powder tender.  Bids were due within the
past few weeks with the results hopefully announced soon.  Europeans
are not sure how they will fare with this tender as powder stocks are
available internationally and will become available during the
delivery period of July - September.  The word intervention continues
to be included with conversations.  Many continue to feel that if
current prices weaken to intervention levels that butter would
probably be the first product to dip that low.  The intervention price
level for skim is 1,698 Euros per MT around $2,202 and the butter
intervention level is 2,217 Euros per MT about $2,876.  Butter
continues to clear to PSA.  Since March 1 through April 29, 54,484 MT
(120.1 million pounds) of European butter have cleared to the PSA
program.  This clearance compares to 30,738 MT last year at this time.

EASTERN OVERVIEW:  Milk production in Eastern Europe is also headed
toward seasonal peak levels.  This year, milk output in the region got
an earlier start than usual and milk producers and handlers are
projecting the seasonal peak in two to three weeks.  Milk volumes are
building thus clearances to manufacturing facilities are also on the
rise.  For the most part, manufacturing facilities are at or very near
capacity levels.  Stocks of new production are building, but many
manufacturers and handlers are not overly concerned at this time.
Some sales are being reported, but the overall sales picture is slow.
Traders are indicating that buyers remain very cautious with their
purchases and are often purchasing for near term needs only.  Eastern
European traders are awaiting the results of a recently announce milk
powder tender and are hopeful that they will be able to fill some of
the tender volumes.

9:30c steve schneeberger   608-278-4154

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STAT News Service