European Dairy Market Summary

MADISON - Jan 8/04 - 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
OVERVIEW:  WESTERN EUROPE:  At this point, trading activity out of Europe 
remains quiet now that the year end holidays are past.  Handlers and traders 
indicate that the strong Euro against the U.S. dollars continues to put 
pressure on sales negotiations.  For business that is occurring, more buyers 
are often switching to Euro pricing versus dollars.  Traders indicate that 
they are seeing more negotiations occurring in Euros versus dollars since the 
inception of the Euro currency.  Buyers state that Euro pricing is more 
attractive, although continued strength in the Euro continues to hamper new 
sales negotiations.  Many traders and handlers are hoping that the EU 
Management Committee will make adjustments to refunds in the near future, 
which will help pricing and sales negotiations.  European traders are stating 
that potential buyers are starting to look to European sources for product 
needs.  International supplies are not as plentiful as in years past, thus it 
appears that more buyers are not able to source their full needs from regular 
suppliers.  More milk production trends across Europe are starting to show 
seasonal gains.  Often these increases are not significant, but milk handlers 
indicate that if they continue to increase, quota year volumes could be 
greatly challenged by the end of March.  Milk volumes over the holiday period 
often ended up in the cheese vat.  Cheese demand has and continues to be 
strong.  Butter buying interest continues from Russia, although handlers and 
traders state that they are seeing more new buyer interest from other 
customers that are not able to get their full needs from regular sources.  
Stocks of European produced dairy products are not overly plentiful, but 
traders and handlers state that they have product, or will have product for 
future deliveries.  In instances, immediate shipment inquiries are going 
unfilled.   


EASTERN EUROPE:  Milk production trends in Eastern Europe remain at low 
seasonal levels, although some milk producing regions are indicating slight 
increases.  Stocks of manufactured dairy products are light.  In many 
instances, Eastern European manufacturers and handlers indicate that they have 
little product available for buyer interest.  Most are looking forward to the 
upcoming production season to once again build inventories.  Many feel that 
Europe will be the source for many buyers during coming months due to the 
tight supply situation elsewhere in the world.

0930c steve schneeberger  (608)224-5084  

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STAT News Service

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