Oceania Dairy Market Overview

MADISON - May 11/06 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Oceania milk production continues to decline, although, for
the most part, output in New Zealand is at seasonal low levels with Australian
output not far behind.  With the fiscal yearend in New Zealand occurring at
the end of May, milk handlers and producers indicate that output will be
behind projections, but will be finishing the year on a positive note.
Producers and handlers state that the first half of the season was not so
good, but improved second half strength caused total output figures to recover
somewhat.  Most feel that total output will be even with last season with some
anticipating final figures to come in at slightly higher levels than last
year.  For Australian producers, their fiscal yearend will occur one month
later, June 30.  Up to this point, cumulative production figures are not as
positive as earlier projected or realized.  The season started off very
strong, but prolonged mid-year heat removed production momentum for the second
half of the season.  Although official production figures for March are not
yet available, producers and handlers feel that the downward trend (when
compared to last year) will continue and output will trail last season on a
cumulative basis.  As milk receipts decline at manufacturing facilities,
production schedules are also being altered and reduced.  Some plants have
already ceased manufacturing schedules for the season while others are
reducing production days during the week.  When possible, plants are directing
milk volumes toward products of best return and whole milk powder is often the
product of choice.  Traders and handlers report no new sales at this time.
Most market activity continues to center around previous commitments.  Stocks
are declining as the milk production season winds down.  Some traders state
that they will be procuring stocks from pre-arranged outside sources to
fulfill their contract commitments.  With this situation occurring, many
handlers and traders are now reporting that they will not have any additional
or surplus product available for spot buyers in the near future.

0930c steve Schneeberger  (608)250-3204

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STAT News Service