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USDA Western European Dairy Market Summary

OVERVIEW: WESTERN EUROPE: Hot and dry weather conditions continue to plague much of Europe. In recent days, temperatures have moderated somewhat, but remain higher than usual for this time of the season. Rainfall also remains limited and when moisture does fall, it is very spotty and not enough. Some contacts feel that it would take two to three weeks of steady rainfall to replenish depleted volumes. The heat and lack of moisture are severely impacting feed stocks. Pastures are basically brown and offer very little for the grazing dairy herd. Some farmers are harvesting crops earlier than they should, gaining some feed quality versus waiting and realizing further declines.

Adverse weather related feed quality and supply conditions are causing some milk producers to look at their dairy operation and question if they should downsize versus purchase additional feed for winter needs. Some feel that if they do not downsize, they will probably greatly reduce concentrate feeding during upcoming winter months. International buyer interest remains slow, although some buyer interest for small lot, immediate shipment, volumes is occurring. Overall supplies are limited and prices are starting to increase. Many European traders feel that they have a window of about one more month of trading opportunity before Oceania competition develops.

Earlier in the month, intervention of skim milk powder attained the 109,000 mt level and a tendering system was introduced for additional offerings. Following the EU Management Committee meeting on August 28, reports indicated that offers of 100 mt were rejected due to price. Intervention is now closed. Also, the Commission sold back 1,899 mt of 16 month or older powder to animal feed buyers at prices ranging 201.52 - 204.5 Euros per ton. The Commission also reduced export subsidies for most all dairy products: butter, -3.8% to 178 euros; skim milk powder, -5.0% to 57; full cream powder, -4.3% to 98; and various cheeses by 9 - 10%.

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