European Dairy Market Summary

MADISON - Jan 22/04 - 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:  The major topic of discussion in Europe is the 
recent export subsidy adjustment announced last week.  The EU Management 
Committee adjusted the export subsidies for skim milk powder from 570 Euros to 
645 and for whole milk powder, 980 to 1035 Euros.  The major factor 
contributing to these adjustments is currency issues.  In recent weeks, the 
Euro has strengthened considerably against the U.S. dollar.  There are varying 
opinions about these adjustments occurring at this time.  Producers are 
supportive of the adjustments with many traders indicating that this 
adjustment is having little impact on current situations and would have been 
of more benefit if it had occurred last fall.  In recent days, the Euro peaked 
over 129 against the U.S. dollar, but also dipped below 124.  Due to Euro/U.S. 
dollar volatility, more traders are negotiating sales in Euros and letting the 
dollar fluctuate.  By mid week, the Euro strengthened and was above 125.  Milk 
production in Europe continues to increase slowly.  As the milk production 
season builds, some countries such as Germany and the U.K. are closely 
monitoring there production volumes as the milk quota year end nears.  Winter 
weather conditions are mixed with some regions receiving typical winter 
temperatures and conditions, while others are milder.  Handlers and traders 
have mixed opinions on current supplies.  Some indicate that there is product 
available, but also state that near term or immediate shipment needs are 
difficult to source.  European traders and handlers acknowledge that 
international supplies are limited and are hopeful that the upcoming 
production season will be favorable for European sourced dairy products.   


EASTERN EUROPE:  Milk production in Eastern Europe is slowly gaining momentum 
from low levels.  Stocks of manufactured dairy products are reported to be 
low, thus most manufacturers are looking forward to the upcoming milk 
production season with optimism.  Traders and handlers are hopeful that the 
limited world supply situation will allow for more sales activity to occur 
from this region of Europe.  At this time, international buyer interest is 
slow, although Russia continues to look for butter and cheese for winter 
needs.  

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STAT News Service

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