Oceania Dairy Market Overview

MADISON - Jan 4/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  The Oceania milk production season continues to edge lower,
influenced by various factors.  In New Zealand, milk output continues to
seasonally decline and production projections of 2 - 3% over last season early
in the year are now being lowered to be 1/2 to 1% above last season.  These
positive projections could quickly change if the last half of the production
season is influences by El Nino weather patterns.  Milk producers and handlers
are already reporting patchy weather patterns ranging from cold/wet conditions
in some parts to sunny and seasonable in others.  In Australia, the milk
production season continues to not develop as anticipated.  Drought conditions
continue to plague much of the dairy region of the country.  The annual
Australian Climate Statement has been released by the Australian Bureau of
Meteorology and shows that 2006 was a year of stark contrasts.  2006 was
another warm year, with the all-Australian temperature expected to come in at
about +0.5 C warmer than the standard mean period of 1961-90.  This would make
the year the 9th warmest since official Bureau records commenced in 1910.  The
cost of irrigation water continues to increase and, in some areas, low storage
levels means allocations of irrigation water are dropping.  Farmers are trying
their best to make declining pasture conditions as productive as possible,
although results in the bulk tank are not that positive.  Various reports
continue to be released on the dairy situation and one recent report indicated
that seasonal output for the year would be down about 11%.  With production in
both Oceania countries not attaining projected levels, stocks of manufactured
dairy products are limited.  Traders and handlers within the countries state
that they are meeting contractual commitments previously made, but are very
cautious about commitments for the balance of the season.  They are hopeful
that they will be able to meet regular and ongoing customer needs as the milk
production season winds down.  Outside of this need, most feel that they will
not have any additional volumes for international buyer interest.

0930c steve Schneeberger  (608)250-3204

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STAT News Service