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USDA European Dairy Market Summary

OVERVIEW: WESTERN EUROPE: The milk production season in Europe continues to wind down. It appears that the heat of this summer did have more of an impact on milk volumes than previously anticipated, especially as the end of the season nears. Milk volumes are lighter than last year at this time, with many milk handlers attributing the lower volumes to heat stress on the milking herd. Often, milk production rebounds in the fall, although this has not happened yet this year. Some feel that the prolonged period of heat may have caused this trend to not develop this season. Additional reports continue to be released on the recent heat wave throughout Europe and the impact it had on the agriculture community. Lack of moisture and prolonged periods of record setting high temperatures did impact crop development and quality. Many dairy producers are concerned about having sufficient feed stocks for upcoming winter needs. Although a volume of feed will be available, the quality of that supply is very questionable.

The Euro has gained strength against the U.S. dollar in recent days. The current exchange rate is comparable to mid August levels, but still has a ways to go to be comparable to higher levels recorded in June. European dairy product prices have firmed in recent weeks with many handlers and traders feeling that a ceiling might be at hand. European traders and handlers are looking at where U.S. prices are and also firming Oceania prices as their milk production season gets underway. Stocks of European dairy products are not overly excessive, although traders indicate that supplies are available for international needs. Russia continues to purchase butterfat from European sources for upcoming winter needs.

EASTERN EUROPE: The milk production season in this part of Europe continues to decline. A fall recovery in milk production is not expected to occur this year as the heat and humidity levels of the summer have basically curtailed the possibility of this trend this year. Stocks of manufactured dairy products are available but not at the level of previous years. Some international sales are being reported out of this area, but not at the levels of previous years.

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