DAIRY PRODUCTS

EUROPE: Rising global milk price has varied causes and effects.

The benchmark price for skimmed milk powder in the UK has risen by 60% in the last six months. The reasons behind this increase are manifold and include factors such as the price of milk falling below the cost of production in the UK resulting in a 50% decline in the number of dairy farmers over the past ten years; severe draught in Australia impacting production and rising demand from China where consumption is predicted to further expand by 15% for the next three years.

The effect of these price rises feeds through not only into the market for pure dairy products such as milk, cheese and butter but also to products which incorporate them e.g. chocolate, cakes and pizzas.

RETAILING

EUROPE: Weather and interest rate rises impact UK retailers.

The BRC-KPMG Retail Sales Monitor for July 2007 shows that UK retail sales rose 1.2% on a like-for-like basis compared with July 2006 when sales rose 3.4%. The current rate of growth was half that experienced in the second quarter of 2007 and the slowest since November 2006.

In contrast to July 2006 which is reported as the hottest on record this July was one of the wettest. Comparisons are also impacted by the occurrence of the World Cup. Sales of food, clothing, footwear, DIY and gardening equipment have suffered whilst department stores and out-of-town shopping centres have benefited from being shelters from the frequent storms.

COAL MINING

EUROPE: Poland plans flotation in coal mining industry.

Poland's Deputy Economy Minister Krzysztof Tchorzewski announced in late July that the government could list state-controlled coalminer Katowicki Holding Weglowy (KHW) on the Warsaw Stock Exchange in late autumn 2008. The funds raised in the IPO would be used to finance investment in the company's facilities.

It is planned that other companies in the sector would subsequently be privatised although the government would retain control over the listed entities.