Oceania Dairy Market Overview

MADISON - May 25/06 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  The milk production season continues to draw to a close in
Oceania.  The official season concluded at the end of May in New Zealand and a
month later in Australia.  With New Zealand's season about to close in a few
days, milk producers and handlers feel that annual volumes will be running
between 2 - 3% ahead of last season.  In Australia, conditions are quite
different.  The season began strong, but is finishing on a less than favorable
pace.  Australian milk producers and handlers were quite surprised at the
sharp decline in March milk production when compared to last year, but they
also state that in March 2005, production was unseasonably strong.  For the
country as a whole, milk output in March 2006 was down 6.2% when compared to
last March and is 0.7% down on last year on a cumulative basis.  In Victoria,
milk output for March was down 8.9% compared to last March and is 1.0% lower
on a cumulative basis.  Monthly output was down in all reporting regions
except Tasmania.  Official annual milk production figures need to be gathered
for three more months (April - June), but most milk handlers are not overly
optimistic about the balance of the year.  Knowing what they have realized in
April and the first half of May, they do not hold much hope for recovery for
this time period to finish the year even with last season.  Many are hopeful
that cumulative figures will not drop below a 1.0% decline once all twelve
months of data are assembled.  As the milk production season comes to a close,
milk handlers and manufacturers are adjusting production schedules to
accommodate the declining milk flow.  In New Zealand, operating manufacturing
facilities are limited in number and most are basically closed for the season.
 Most milk at this time is being bottled for liquid milk needs.  In Australia,
manufacturing is declining, but remains more active.  Some Australian
manufacturers that can, are directing milk volumes toward butter/powder and
away from cheese and whole milk powder.  Traders and handlers state that they
should have adequate stock to carry them through the winter months, but may
need to secure some stock from pre-arranged outside sources before new
supplies are generated.  Suppliers and traders state that even though
international buyer interest is slow, they basically do not have any surplus
product available for spot or new buyer interest.  Traders state that they
have a pretty good idea what volume of product they will have available during
the production season and have basically fully pre-sold this volume early on
in the season with minimal volumes left at the end of the year.

0930c steve Schneeberger  (608)250-3204

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STAT News Service