Oceania Dairy Market Overview

MADISON - Jul 5/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  The winter season is at hand in Oceania and the conditions
are mixed.  In New Zealand, temperatures are typical for this time of the year
and moisture is adequate in most areas.  The 2006 - 2007 milk production
season generated between 2 - 3% more milk than the previous year and
projections for the 2007 - 2008 are much the same.  In Australia, temperatures
have cooled and rainfall is spotty.  Recent good rainfall has been reported in
the southern regions of Victoria with Gippsland getting significant rainfall.
This particular region has minimal irrigation, thus rainfall is needed to
maintain pasture growth.  Further North in Victoria, where irrigation is more
prevalent, rainfall has been reported but not significant enough to replenish
greatly depleted water reserves and water restriction continue.  Milk
production in Australia is at seasonal low levels, thus manufacturing of dairy
products has virtually ceased.  Milk production figures for May indicate that
output for the month was 11.6% lower than May 2006.  This brings cumulative
production for the first 11 months (July - May) of the 2006 - 2007 year to
-4.8%.  Traders and handlers within Oceania are filling orders from
inventoried stock which are at or very near depleted levels.  In most all
instances, handlers indicate that they will not have any carry over stock as
the new milk production season resumes in the next six to eight weeks.  Some
handlers indicate that they will be reaching into new production to fulfill
current commitments.  Forward contracting for the 2007 - 2008 milk production
season is being reported with prices on the firm side.  Traders and handlers
state that they are being cautious to not over commit, especially for the time
period following peak milk production.  Opening milk prices for the upcoming
season are being reported in the 20 - 40% higher than last season level.  This
has most producers very optimistic about the 2007 - 2008 season and hopes are
high that temperatures and moisture levels will be equally as positive as the
milk price.  Producers in Australia are hopeful for a good season, but also
state that even if all factors are positive, they might realize a 1% increase
over last season.

0930c steve Schneeberger  (608)250-3204

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STAT News Service