May 27, 2005
European milk production remains at high levels
Milk production in Europe is generally at peak levels, although some milk handlers indicated that the peak is past. Milk receipts at some plants are already trending slightly lower. Unofficial milk reports have earlier stated that overall EU milk volumes are running 1-2 percent over last year at this time. As peak levels traditionally occur around end-May, the 2005 season is in line with timelines in previous years.
Milk volumes are causing most manufacturing plants to maintain peak production schedules, although milk volumes are being redirected toward some products and away from others when possible. Milk diversions away from milk powders are causing unsettledness among some end users, especially the internal calf feed industry. Feed buyers are returning to the market to position themselves for needs later in the summer and fall, leading to higher prices.
Outside of this spurt in buyer interest, traders and handlers state that other domestic or international buyer interest is very light and mellow. International buyers continue to hold off knowing that export licenses are very limited through the end of June, and post-June sales negotiations are limited due to the uncertainty of refunds after July 1. Price resistance is another factor limiting powder sales.
Meanwhile, milk production continues to climb to seasonal peak levels in most Eastern European countries. Temperatures have been cool and moisture has been limited. Milk handlers and processors indicate that spring development conditions run a few weeks behind Western trends, thus they remain optimistic that the spring peak will be equally as positive. Eastern European manufacturers indicate that sales activity has been and remains slow. Some very recent buyer inquiry from Western European buyers/traders is the most activity that many have experienced thus far this season. Much of this inquiry has been for supply commitments for post-June needs, but end users are still unknown.
