European Dairy Market Summary

MADISON - Feb 5/04 - 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:  Milk production in Europe is showing more signs of 
seasonal increases.  Producers in countries such as Germany, the U.K., Italy, 
and Spain are realizing production strength to the point that they are closely 
monitoring their production gains as the quota yearend nears.  As milk 
production gains momentum, manufacturing schedules are also on the increase.  
Some manufacturers are now preparing powder for intervention offering when the 
program opens March 1.  Some producers and handlers anticipate that offerings 
to intervention will be heavy.  A concern for many within the EU is what 
impact, after May 1, will 10 additional countries have on intervention 
offerings.  Last year, intervention reached the capacity threshold of 109,000 
mt early in August from 15 countries with a tendering system instituted for 
the balance of the month.  This year, the capacity threshold potentially could 
be reached earlier, thus limiting incomes to producers and handlers due to 
lower prices under a tendering system.  Current international buying interest 
is slow and unaggressive.  The Euro remains firm against the U.S. dollar but 
not at levels recorded a few weeks ago.  European traders and handlers 
indicate that stocks are available for buyer interest.  Most look forward to 
the upcoming milk production and sales season with great optimism.  
International supplies of dairy products appear to be limited elsewhere in the 
world, thus buyer interest is anticipated be greater for European sourced 
dairy products.   


EASTERN EUROPE:  Winter weather conditions continue to prevail in Eastern 
Europe, thus overall milk production remains seasonally low, but is slowly 
gaining momentum in some areas.  Stocks of Eastern European dairy products are 
reported to be low, thus the upcoming milk production season is being welcomed 
with optimism to once again re-establish workable inventories.  Buyer interest 
is slow, although Eastern traders and handlers anticipate the European market 
to be actively involved with sales in the coming months.

0930c steve schneeberger  (608)224-5084  

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STAT News Service

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