December 24, 2004

Slow Milk Production Trends in Europe

The milk production season in Europe is basically at the low point of the year, although most producers and handlers are looking forward to the upcoming production season with optimism. 

Most reports presently indicate that overall output is trailing last year for the same period, but some producers will have to closely monitor their volumes as the milk quota year-end approaches.  Weather conditions in Europe have been quite favorable for much of the fall.  In recent weeks though, winter temperatures are being reported in more regions which will slow production development as the new season nears. 

Traders and handlers indicate that international sales activity is quiet.  The year-end holidays partly attributed to this, but higher than desired prices for potential buyers are also limiting sales development.  European suppliers and traders are now reporting lower offering prices in hopes of encouraging buyer interest.  Due to a weakening trend in Europe, buyers are hesitant to commit at this time and are holding off placing orders for possible further price adjustments. 

Stocks of manufactured dairy products are available for both domestic and international buyer interest.  At this point, most sales activity is centered around internal or domestic needs.  The Dairy Management Committee has not acted upon any major dairy related issues at their most recent meeting.  Intervention stocks continue to be sold back to the trade.  As of December 9, skim milk powder intervention volumes were nearly 77,000 MT with about 40,000 MT of this available for potential sale. Butter intervention volumes are heavier with nearly 173,000 MT being held with 136,000 MT available for potential sale.

In Eastern Europe, winter weather conditions and temperatures are being reported which will slow overall milk production trends.  At this point, production is hovering around seasonal low levels in most countries.  Stocks of manufactured dairy products are reported to be available.  Slow international buyer interest reported out of this region is basically attributed to firmer than desired prices especially from EU-25 countries in the region.  Traders and handlers are hopeful that sales will develop early in the new year as prices adjust.