Oceania Dairy Market Overview

MADISON - Apr 12/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production continues to decline in both New Zealand
and Australia.  In New Zealand, milk output is edging lower following typical
fall trends.  Rainfall was somewhat limited a few weeks ago, but in recent
days, regular/normal rainfall has been reported.  A week to 10 days ago, some
major rainfall was reported on the Northern tip of the north island which did
cause some disruption in milk logistics.  Most New Zealand milk handlers no
longer anticipate a late season burst in production as the season winds down.
In Australia, conditions are much the same as they have been for a good
percentage of the current season, dry.  Pastures and paddocks are brown with
an occasional shower greening up the grass for a short time, but otherwise
lack of water continues to negatively impact milk production trends.  During
February, milk production was down 10.8% from last February.  This monthly
decline is comparable to last month's decline.  Cumulative production for the
first 8 months of the year (July - February) is down 3.3%.  During February,
milk output in Victoria was down 15.2% from last February and is 5.1% lower on
an 8 month cumulative basis.   February's output in New South Wales was down
4.8% and 7.3% lower in Queensland.  Australian milk producers and basically
all agriculture related industries are hopeful that typical fall rainfall will
occur which will help the recovery process.  Most milk handlers and producers
feel that as the milk production season winds down, cumulative production at
the end of the season will be down between 8 - 9%.  Early projection on next
season are that output will probably dip a little lower, but hopefully
production and agriculture in general will return to the positive side.  The
recovery process for all agriculture hinges on favorable rainfall that will
once again replenish ground water and reservoir levels.  International demand
continues to build.  Buyers are in the market looking for product for near
term and future needs.  In most instances, Oceania is out of this market.  As
has been the case for the entire season, stocks have been and continue to be
fully committed.  Some commitments are already reaching into the 2007-2008
milk production season.  Some traders indicate that that it is too early to be
making these commitments, although some buyers are anxious to secure a supply
source and will deal with the price later.

0930c steve Schneeberger  (608)250-3204

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STAT News Service