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MD DA100 EUROPEAN DAIRY MARKET OVERVIEW

MADISON, WI. July 9, 2009 (REPORT 27)

WESTERN AND EASTERN EUROPE

WESTERN OVERVIEW:  

Milk production in Western European continues to decline 
seasonally.  In some areas, hot and humid weather patterns 
spurred the decline, but as temperatures moderated, this decline 
eased.  Milk volumes are mixed when compared to last year at this 
time. Reports for Germany and Italy indicate that volumes are 
running ahead of last season, France is steady, while Ireland and 
the UK are experiencing lighter volumes.  The major topic of 
discussion in Europe this week is the possibility of an extended 
intervention open period.  As part of its ongoing efforts to help 
stabilize the European dairy market, the European Dairy 
Commission has proposed to extend the period for buying butter 
and skimmed milk powder into public intervention.  Typically, the 
season is open from March through August and now the commission 
is proposing to extend the period of intervention until the end 
of February 2010 or the entire year.  They are also proposing 
that it should be authorized, if the market situation so 
requires, to extend it further until the end of February 2011.  
At this point, this is a proposal that needs approval by a higher 
authority, but most within the industry feel that the proposal 
will be approved.  At the most recent Dairy Commission meeting on 
Thursday July 9, all subsidy levels were unchanged.  Skim milk 
powder continues to clear to intervention and now these stocks 
total nearly 230,000 MT with butter intervention totals nearing 
82,000 MT.  Traders and handlers of manufactured dairy products 
continue to indicate that international buyer interest remains 
slow with most sales activity centered around an internal need.  
 

EASTERN OVERVIEW:  
    
Milk output in Eastern Europe is near or at seasonally high 
levels with some milk handlers indicating that receipts are 
starting to trend lower.  Overall milk production is running 
higher than last season in Poland, while basically elsewhere is 
behind last season.  Economics of milk production and low pay 
prices are two factors being attributed for production to be 
lighter in many countries of the region.  Stocks are available 
for immediate and future buyer interest.  At this time, sales are 
limited.

0930c steve Schneeberger  (608)250-3204