European Dairy Market Summary

MADISON - Feb 18/10 - 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:  Cold temperatures throughout many areas of
Europe are limiting milk production growth to levels that are
lower than last year at this time.  Although milk output is
lower than last season, most milk handlers are not overly
concerned and state that growth will occur when weather
conditions are more favorable.  Many state that this will
probably push peak level attainment to a little later in the
spring which should be no problem.  Many traders and handlers
are closely monitoring the outcome of a recent milk powder
tender for March - May delivery.  No specific volumes are
known, but traders speculate that between 30,000 and 50,000 MT
of a combination of skim and whole milk powder are being
sought.  They are also speculating, that with the near term
delivery period, much of the powder will probably be sourced
from Europe.  The end of the current open season intervention
year is February 28 with the new season beginning on March 1.
Traders and handlers expect that in the short term, no
intervention purchases will occur.  The new year program will
run for 6 months (March - August) with intervention price
levels of 1,698 Euros per MT for skim milk powder and 2,217.5
Euros per MT for butter being unchanged from last season.
Maximum levels of 30,000 MT of butter and 109,000 MT of skim
milk power will be purchased at prevailing intervention
levels.  Current market conditions are at a completely
different stage than they were last year at this time.  Last
year, purchases for both butter and skim milk powder were
heavy once the program was open with butter attaining maximum
levels very quickly with skim milk powder attaining maximum
levels a while later.  Also last year, the open season was
extended to include a full twelve months versus the
traditional 6 months.  At the February 18th Dairy Management
Committee meeting, no significant dairy adjustments were
reported and export refunds were unchanged at zero.

EASTERN OVERVIEW:  In Eastern Europe, winter weather
conditions continue and milk production remains seasonally
low.  It will be a month or so before noticeable increases are
reported from this region.  Eastern European manufacturers and
handlers are wondering how involved they may be with the
recently announced milk powder tender, especially due to the
near term delivery period of March - May.  They feel that they
will be in a better position to fill needs during the end of
the shipment period versus early in March.

0930CT steve Schneeberger  (608)250-3204

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STAT News Service

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