Oceania Dairy Market Overview

MADISON - Dec 7/06 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production continues to trend lower seasonally
in New Zealand.  Weather forecasters continue to anticipate an El Nino
weather pattern which generally causes some areas to be wetter than
normal, often the western side, and drier on the eastern.  Neither
change is considered conducive to good pastures, and as a result, milk
production.  Most anticipated current season production has been
committed to buyers, leaving little available for spot sale.  The
current emphasis in the product mix is toward powders.  Powder prices
are reportedly around record high levels.  Overall milk receipts thus
far in New Zealand are tracking just above year ago levels.  Australia
remains in a major drought and with at least occasional higher summer
temperatures (90+F degrees), milk receipts are being impacted.  The
first few months of the current milk production season started strong
in Australia though the current forecast has overall output for the
entire season down about 7% from the last season.  Depending on the
weather, the decline could escalate further.  Current producer milk
prices have been fairly strong when compared to recent years but
purchasing feed and, in instances, additional supplies of water, can
easily tax producer bank accounts and lead to additional culling.
Brush fire is also an increased risk under the current dry conditions.
  Exporters are worried about meeting current commitments and have
limited new sales to their best customers.  Supplies for spot sales of
any product, but particularly powders, are very limited.

0930c George Koerner 608.250.3205

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STAT News Service