STAT Communications Ag Market News

European Dairy Market Summary

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.

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 608.557.7005
USDA/AMS/Dairy Market News, Madison, Wisconsin
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