European Dairy Market Summary

MADISON - Apr 1/04 - 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 milk quota year-end is now at hand and milk
marketings are mixed within many EU countries.  Up to this point, milk
production has been trending higher, but many milk handlers have indicated
that it is quite difficult to put a precise figure on the growth as March 31
neared.  There are some countries that are experiencing strong growth which
will push them above quota levels, while others are just at or slightly below
penalty levels.  As a new quota year begins, producers and handlers are
optimistic about the current production season.  Many within the dairy
industry indicate that several changes will be occurring within the next few
months that will greatly impact current programs and marketing conditions.  A
tendering system for export refunds versus the current program, the inclusion
of 10 additional countries to the EU on May 1, and reduction in the
intervention price for butter on July 1 are just three significant
developments.  Guidelines have been released for the operations of the new
tendering system for skim milk powder, butter, and butteroil.  The first
application period will run from April 7 - 14 with the program scheduled to
offer two application periods each month.  Some traders and handlers indicate
that they may await the outcome of the first round of applications and
subsequent results before participating themselves.  Some sales activity has
occurred out of Western Europe on skim and whole milk powder by those traders
that are holding old refunds.  This sales activity will have to be completed
by the end of April at which time old refunds will no longer be valid.
Traders do indicate that there is buyer interest for post May 1 delivery, but
the uncertainty of export refund values is squelching finalization of these
inquiries.  Stocks of manufactured dairy products in Western Europe are not
heavy, thus manufacturers and handlers are looking forward to the upcoming
milk production season.

EASTERN EUROPE:  Milk production continues to increase seasonally.
Temperatures are warming and spring weather conditions are being reported in
more areas of Eastern Europe.  Some traders and handlers have reported that
sales out of Eastern Europe has been active.  Much of this activity is being
attributed to the lack of Western European supplies and limited export
refunds.  Butter has been clearing to the U.S. due to tight supplies and
potential light supplies for much of the year.  Also, some sales activity is
being reported from this region of Europe prior to inclusion of the additional
10 countries into the EU15 on May 1.

0930c steve schneeberger  (608)224-5084

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STAT News Service

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