MD_DA100
DA
MD DA100 EUROPEAN MARKET OVERVIEW
MADISON, WI.  October 12, 2017 (REPORT 41)

WESTERN OVERVIEW:

       Earlier this week, many in the global dairy industry scrambled to 
assess the potential impact of comments from the EU Commissioner of 
Agriculture, suggesting a new approach to intervention. Noting a need 
to clear the approximately 380,000 MT of SMP in public storage, and to 
seek to limit new volumes that might otherwise enter intervention when 
the next window opens March 1, certain measures were suggested. The 
commissioner suggested ending having a fixed price buying ceiling for 
SMP tendered and move to 0. He also proposed that tendering start 
right away to allow consideration over coming months as to which 
volumes should be entered into intervention starting March 1. This 
proposal and any such changes would require approval of the European 
Council. Before council consideration, talks will be conducted 
beginning soon in the Special Committee on Agriculture. No new 
suggestions were made as to disposing of stocks already in 
intervention. 
       There was general consensus at last week's meeting of the 
Directorate General for Agriculture and Rural Development of the 
European Commission, that the short term outlook for EU dairy markets 
is better than last year at this time. Milk prices are relatively 
stable in EU countries at levels helping to stimulate milk production. 
       For the year projections remain that milk production will 
increase 0.7 percent for 2017 compared with 2016. 
       Cheese production in the EU is helped by strong export demand as 
well as industrial use in the EU. Cheese production is projected to 
increase 2.0 percent in 2017. Expectations are that 2018 growth in 
cheese output will also remain at near 2.0 percent, assuming that 
expected export growth from Japan and South Korea continues. 
       EU butter production during 2017 is expected by the commission to 
be about 3 percent lower than 2016, with exports down 10 percent. 
       The expectation is that SMP exports will be strong in the balance 
of 2017, as well as 2018. If that occurs and 2018 SMP production 
increases, it was suggested by some participants that around 150,000 
MT of SMP could then be released out of intervention in 2018. Further 
official action would be necessary before that happens.
       EU efforts to reach or update dairy export agreements with other 
countries have become very high priority. The recent renewed EU 
commitment to expanding dairy exports, presented in late September and 
named the "Trade or All" strategy, was further clarified at a meeting 
of EU dairy industry leaders. Noting finalization of the EU-Canada 
trade deal, and the Japan trade agreement now being mostly sealed, 
satisfaction was expressed as to progress in negotiations with 
Singapore and Vietnam. Progress made in ongoing negotiations with 
Mexico and Mercosur was also noted. Other trade agreement goals 
mentioned were updating an agreement with Chile, as well as continuing 
discussions with the Philippines, Malaysia and Thailand.
       January-August Algeria cheese imports, 15,261 MT, decreased 40.4 
percent from the same period one year earlier, according to Eucolait. 
The range of monthly percentage changes in cumulative import volumes 
varies from -46.9 percent in February, to -28.5 percent in April. 
Import volumes and primary origins are shown in the following table:
  		
                      Algeria Cheese Imports
                 	Main Three Origins 
                 	January-August 2017 
 
Origin       	Quantity(MT)   Percent of Total  
Netherlands            4,963                32.5
Ireland                4,064                26.6
New Zealand            2,484         	      16.3
	



	
EASTERN OVERVIEW:

	
       January-July notched some changes in imports for Belarus, 
compared with the same period last year. Bulk milk imports were -93.8 
percent; cheese was down 15.7 percent; and whey powder was down 40.7 
percent according to CLAL.








0930c eric.graf@ams.usda.gov 
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: http://www.ams.usda.gov/market-news/dairy
Dairy Market News database portal: 
http://www.marketnews.usda.gov/mnp/da-home