Oceania Dairy Market Overview

MADISON - Apr 27/06 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production in both New Zealand and Australia continues
to decline as fall weather and temperature patterns develop.  In New Zealand,
the second half of the production season provided for some additional milk
volumes which helped first half losses.  Production totals vary from reporting
sources.  Some continue to indicate that total output is trailing last season,
while others are more positive.  At this point, many milk handlers anticipate
that annual volumes will be comparable to or above last season.  In Australia,
the milk situation is almost opposite New Zealand's.  Australian producers
experienced a positive start to the season with milk volumes running nearly 1%
ahead of last season on a cumulative basis.  By December, hot temperatures
prevailed for quite some time which slowed production momentum.  In January,
the heat continued to be a negative factor which further limited production
recovery.  As the Australian production season winds down, milk producers and
handlers feel that the heat of the summer was too extreme to anticipate any
type of recovery for the balance of the season.  Producers and handlers are
optimistic that the season will conclude with volumes comparable to last year,
but there are still four unreported production months (March - June) before
the 2005 - 2006 fiscal year ends.  Already cumulative output for the first
eight months (July - February) is down 0.1% when compared to last season.  As
milk volumes decline, so are manufacturing schedules.  When possible, Oceania
manufacturers are directing the declining milk volume toward production of
products of most need and/or best return.  Traders and handlers remain
optimistic that they will have sufficient volumes of product to fulfill their
contract commitments.  Traders state that if they do not have sufficient
Oceania sourced volumes, they may need to reach to pre-arranged outside
sources.  Traders and handlers report that no new sales activity is occurring
with basically all transactions centering around regular and ongoing
customers.

0930c steve Schneeberger  (608)250-3204

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STAT News Service