Oceania Dairy Market Overview

MADISON - May 12/05 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Seasonal milk production in Oceania is nearing an end for
the 2004 - 2005 year.  In New Zealand, the milk production year will come to
an end at the end of this month.  Although still not officially released, milk
producers and handlers are projecting yearly output to trail last year by 3 -
4%.  Producers and handlers were hoping that the second half of the production
season would generate some additional milk to help reduce first half deficits,
but conditions did not develop as positively as hoped, although some feel that
some recovery did occur.  In Australia, the 2004 - 2005 milk production season
will continue through the end of June.  The most recent production data out of
Australia has milk output for the 9 month period of July - April showing that
output is still trailing last season by 0.3%.  Cumulatively for the year thus
far, output in Australia has fluctuated between even to 1.1% behind last year.
Producers and handlers are hopeful that the final 3 months of the year will
maintain these trends and that they will finish the year within an even to 1%
behind last season range. Milk production in Victoria for the period July -
April is running 2.0% ahead of last year, while off in Queensland by 9.9% and
5.3% lower in New South Wales.  As the milk production season winds down, so
are manufacturing schedules.  In New Zealand, most plants are already closed
for the season.  During the down time, plant maintenance will be performed so
that plants will be ready to receive milk in the new season starting in
August.  In Australia, conditions are much the same as plants adjust their
production schedules to declining incoming milk volumes.  Stocks of
manufactured dairy products are in very close balance and remain often short
of full needs.  Some handlers and traders indicate that they may have to look
to outside sources to fully acknowledge all commitments during the upcoming
winter months.  Most state that they will not have any surplus stock available
for spot or additional buyer interest.  Early in the week in New Zealand, an
unsettling situation developed which could potentially devastate the country's
agriculture dependent economy.  An extortionist claim to Prime Minister Helen
Clark indicated that they have infected a New Zealand island with foot and
mouth disease and that they also threatened to release the virus on the
mainland later this week.  In light of this potential situation, European
Union and Japan have already asked that livestock from the island be blocked
from their markets.

0930c steve Schneeberger  (608)224-5084

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STAT News Service