Oceania Dairy Market Overview

MADISON - Oct 26/06 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production in Oceania is building toward
seasonal peak levels, although the conditions are quite different in
New Zealand and Australia.  In New Zealand, peak production is about
two weeks away and most milk handlers feel that output is marginally
ahead of last season at this time.  Milk handlers and producers state
that a cool and wet spring has slowed production growth.  Most are
concerned about second half production.  Many feel that El Nino
weather patterns will impact second half output, but to what extent is
still unclear.  In Australia, especially in Victoria, dry conditions
are impacting milk output as the seasonal peak is still 4 - 6 weeks
away. Milk production trends for the first two months of the fiscal
year (July and August) were on the positive side, but producers and
handlers state that subsequent months' output will probably not be as
positive.  Agriculture in general in most areas of Australia is in a
difficult situation.  A late spring frost impacted the fruit crops and
lack of moisture is greatly impacting most all agriculture
enterprises.  In Victoria, which generates about 80% of Australia's
milk volume, moisture is limited and water allocations are minimal.
Some reports indicate that milk output in the northern half of the
region is down as much as 20% in recent weeks.  At this point,
manufactured dairy products are fully committed and manufacturing
schedules are being managed to fit sales profiles.  Many manufacturers
and handlers are alerting traders and sales staffs to be very cautious
about commitments during the second half of the milk production
season.  The uncertainty of milk production during this period is
weighing heavily on many within the dairy industry.

0930c  steve Schneeberger  (608)250-3204

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STAT News Service