"The report states that Muggles have been sighting flying objects for many years, unaware that they are observing escaped Quidditch balls. Professor Penrose recommends an increase in the fine for improper storage of Quaffles."
-- from the Daily Prophet article "Muggles not as Stupid as We Think, says Ministry report" (DP1)
UFOs are “Unidentified Flying Objects”. Muggles do not realise that these are Quaffles (DP1).
As reported in the Daily Prophet, a Ministry of Magic committee headed by Professor Phoebus Penrose drew attention to Muggles thinking that they are seeing the flying ships of alien beings in the sky, which are in reality loose Quaffles that have escaped from a Quidditch pitch.
As Muggle awareness of these “unidentified flying objects” (UFOs) was a problem for the Ministry under the Statute of Secrecy, the Committee’s report “A Study of Muggle Suspicions About Magic” recommended an increase in penalty fines for allowing Quaffles to escape (DP1).
Although the date printed on the first Daily Prophet Newsletter (DP1) is 31 July 1998, the timeframe for this event is 1992-1993.
From the Web
Writing by J K Rowling on Pottermore: The Daily Prophet