European Dairy Market Summary

MADISON - May 13/04 - 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 adjustment to the expanded EU is
continuing though at least initially, dairy industry concerns may have
been over-estimated.  Current domestic markets seem to be in
relatively good shape.  Current supplies of most items seem to be in
reasonable balance with internal demand.  Among some of the major EU-
15 countries, current milk intakes seem to be lagging year ago levels,
perhaps due to a lengthy, cool spring.  However, the overall seasonal
trend of increased receipts is continuing.  Russian cheese sales are
being complicated by recent health certificate rule changes.  Export
refund levels and availability remain a problem for exporters though
the allowable volume of dairy exports under subsidy are nearing the
maximum allowed under GATT for the current year ending June 30.
Intervention purchases have been limited.  The price disparity between
old and new member countries' prices continues and has buyers and
potential sellers somewhat confused.  The somewhat weaker Euro
compared to the US dollar and some other currencies are affecting
reported price ranges.


EASTERN EUROPE:  The adjustment for new EU countries continues.  Worries
about understated dairy product inventory levels thus far, at least,
seem overstated.  Cooler spring weather may have slowed the spring
milk increase in some countries.  In Russia, reports indicate milk
production may be lower.  Some countries in the expanded EU have
reportedly been having problems with interventions program procedures.

1100c George Koerner 608.224.5083

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STAT News Service