May 13, 2005

Milk production trends positive in Europe so far

Milk producers and handlers in Western Europe state that conditions have been very positive for steady production growth, with European Union milk production at, or at very near peak levels throughout the region. Milk volumes are heavy, thus most manufacturing facilities are running at or very near capacity levels. 

International sales activity out of Europe is slow, fair at best.  Current transactions are being limited by the volume of export refunds that remain for sales through the end of June.  Stocks are available, although buyers are absent from the market. 

Much uncertainty prevails within current markets for sales after July 1.  Traders and handlers are hopeful that the EU Dairy Commission will establish refund levels earlier this year versus the week before as was the situation last year.  Buyers are looking for product to be delivered later in the summer, but suppliers are very hesitant to acknowledge and negotiate these inquiries until export refund vales are established. 

At this point in the milk production season, manufacturing schedules are actively generating stocks for future use.  Unusual for this time of the production season, milk is being directed toward casein and cheese production when possible.  These strong markets are providing an outlet for milk versus generating butter/powder and offering larger volumes of surplus product to intervention. 

Intervention offerings remain light.  Since March 1 and through May 8, 3,295 tonnes of skim milk powder and 22,245 tonnes of butter have been offered to intervention.

Eastern Europe

Early season milk production trends remain positive.  Up to this point, milk output has been running well ahead of last year and these trends appear to continue, although moisture conditions are lower than desired. 

Overall, international sales are fair at best, also limited by export refund through the end of June and the uncertainty of post June refunds.  Stocks are available for immediate and future needs.  Buyers are actively seeking product for later summer delivery, although traders and handlers are reluctant to acknowledge this buyer interest due to the uncertainty of export refunds for that time period.