Oceania Dairy Market Overview

MADISON - May 10/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  New Zealand's annual milk production season comes to a
close at the end of the month.  At this point, milk producers and handlers are
reporting that production is running about 2% heavier than last year.  In
Australia, their production season will conclude at the end of June and
handlers are speculating that the decrease below last season may not be as
sharp as previously projected.  Recently, milk production figures for March
were released which indicated that production in Australia during the month
was off 10.3% when compared to March 2006.  In Victoria, output during March
was down 16.0%, 5.7% lower in Queensland, 7.4% lower in Western Australia, and
1.8% lower in Tasmania, but 1.1% higher in New South Wales and 1.9% higher in
South Australia.  Cumulatively, for the first nine months (July - March) of
the season, milk output is down 3.9%.  Year to date milk production continues
to hold up remarkably well in the face of continuing severe and widespread
drought conditions.  However, it has come at a significant financial cost,
with nearly one in two dairy farms operating at a farm cash loss this year.
Within the past couple of weeks, some much needed rainfall has been reported.
 Reports indicate that much of this rain has fallen in the grain belt areas,
but some dairy areas received enough to green pastures and late season
production appears to be responding to the better pasture conditions.  Milk
producers and handlers state that the rainfall was insignificant to replenish
greatly reduced water levels.  International demand for manufactured dairy
products remains strong and supplies are limited.  As has been the case for
the current milk production season, Oceania supplies have been fully committed
and some traders may need to reach into new production to fulfill current
commitments.  More and more traders are reporting that sales negotiations for
new season supplies are well underway.

0930c steve Schneeberger  (608)250-3204

---

STAT News Service