MADISON - Dec 23/15 - 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 WESTERN OVERVIEW: Milk production in the E.U. has been stronger overall than previously expected during the final three months of the year. Countries noted as having particularly strong milk production include Ireland, The Netherlands, the United Kingdom, Germany and France. Production during the first 3 months of 2016 is expected to be ahead of the first 3 months of 2015. Higher than expected milk production during the final quarter of the year, ahead of the same period the previous year, is considered indicative of the potential for higher production during the first part of 2016. Typically milk production increases from January into May in the E.U. Caution is being voiced that beginning 2016 with atypically higher milk volumes could lead to keeping processing facilities very busy. There is concern about potential production bottlenecks next year. This is viewed as keeping pressure on prices next year, particularly skim milk powder leading to continuing intervention purchases, as well as whole milk powder. This view of 2016 suggests a challenge for a market recovery. Some of the increased milk production this year has gone into cheese manufacturing, where pre-Christmas sales have been especially strong. This has somewhat drawn down cheese inventories immediately ready for sale but manufacturers are comfortable with inventories at this time. Cheese in aging programs overall remains early in the process and has some months to go before becoming sale ready. Cheese export sales are stable. Fluid milk sales are expected to be lower, as many businesses close over a 3 or 4 day period with people staying close to home. Markets for milk powders are mostly quiet, which is the typical situation at this time of year in the E.U. The European food industry is believed to be adequately stocked. This leaves potential buyers cautious and price sensitive. Particularly with skim milk powder being sold into intervention, for the first time since 2009, expectations are for pricing to remain near current levels for a while which lessens pressure to finalize transactions. Pricing for whole milk powder and skim milk powder have trended lower throughout 2015. EASTERN OVERVIEW: Poland is the fourth largest milk producer in the E.U. and a net exporter of dairy products. Production January- September 2015 is up 1.9% from the same period of 2014. September 2015 farm gate milk prices were 11% below prices in September 2014. Lower prices are attributed to increasing production but slower export markets. Expectations are that lower milk prices will not lead to some dairy producers reducing milk production. Revenue dependency necessary to repay 2013 and 2014 credits used to enlarge and modernize farms necessitates certain levels of revenue. 0100c Eric.Graf@ams.usda.gov 608.557.7005 USDA/AMS/Dairy Market News, Madison, Wisconsin Dairy Market News website: http://www.ams.usda.gov/market-news/dairy Dairy Market News database portal: http://www.marketnews.usda.gov/mnp/da-home
STAT News Service
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