MD_DA100

     European Dairy Market Overview

     Report 41 - Released on October 11, 2018

     WESTERN OVERVIEW:

     Milk production for 2018 in the EU is still expected to be higher than 2017, but not by as
     much as previously projected. The drought earlier this year, and the resulting lower
     availability of forage, are the reasons cited for the downward adjustment. The European
     Commission revised projection for 2018 milk production is +0.8 percent. The revised forecast
     for 2019 is +0.9 percent.

     Milk production continues the typical seasonal decline in much of Western Europe. Among some
     leading milk production nations, Germany early reporting for last week is that production
     was down about .3 percent from the previous week. That varies among the individual states.
     Current milk volumes are called normal. France is believed to be down a bit more. Production
     in Germany this year is projected to decline into November before trending up once again.

     Cheese demand within Germany and France is considered by manufacturers to be good. Ordering
     is brisk.  Demand is expected to increase moving toward December holidays. Prices are noted
     to be firming for Q4 orders. Buyers want to be assured of supplies and some sellers are able
     to nudge prices up because there is enough uncertainty among buyers as to milk supplies and
     hence, availability. The slightly firming pricing is acceptable for many buyers when
     considering being left to spot markets during December if milk production does not develop
     as anticipated.

     Some attention has been paid to the recent announcement of a trade deal between the United
     States, Mexico, and Canada. Current Mexican tariffs for imported U.S. cheese are a topic
     closely monitored within the European cheese industry. By this week, many observers
     concluded that it was unlikely that the Mexican tariffs would be lifted in the immediate
     future. It has come to be understood in the EU that the proposed trade deal does not seem
     likely to be considered by Congress until 2019, or possibly later. Then it also became
     clearer that other dairy provisions will be phased in over up to six years if and when the
     deal is ratified by Congress. Thus, no plans seem to have been changed within the EU dairy
     industry.

     Meanwhile, the sixth round of talks between the EU and Indonesia concerning a free trade
     agreement began this week. Dairy officials in the EU understand that Indonesian officials
     are hopeful that terms can be agreed to by spring 2019, when elections will occur.

     Spain has joined the list of countries adopting mandatory origin labeling for milk and other
     dairy products. Old labels may be used until the end of January 2019, after which labels
     must identify the country of origin.



     EASTERN OVERVIEW:

      Development of the Eastern European dairy industry continues to be a matter of high
     importance in the region. A large component of the Eastern European dairy industry recently
     met near Warsaw, Poland. A focus of the conference was EU and private investment funds and
     stabilization packages accessible by the Eastern European dairy industry.
      Ukrainian cheese producers have been dealing with weak prices for internal cheese sales for
     a while. Stocks of cheese have been accumulating. Recent domestic prices are reported to be
     about $1.95 to $2.27 per pound for domestic markets.

     Information for the period October 1 - 12, 2018, issued biweekly

     Published by:
     Dairy Market News - Madison, WI
     Eric Graf, 608.422.8590
     Email: eric.graf@ams.usda.gov

     Additional Dairy Market News Information:
     Dairy Market News (DMN) by Phone: (608)422-8602
     DMN Website: http://www.ams.usda.gov/market-news/dairy
     DMN Database Portal: http://www.marketnews.usda.gov/mnp/da-home