Oceania Dairy Market Overview

MADISON - Aug 30/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  In New Zealand, milk production continues to
increase slowly.  Wet conditions and limited sunshine are
contributing to a slower start than anticipated.  Although milk
output is slow in gaining momentum, milk handlers indicate that
output is ahead of last season.  In Australia, the new milk
production season has not resumed to any noticeable extent.
Winter moisture amounts have been good, although still below
needed volumes and desired surplus levels.  Annual milk production
figures for the 2006 - 2007 season were recently released which
indicated that output for the year trailed last season by 5.1%.
Cumulative milk production figures were on the positive side for
the first five months (July - November), but decline on a steady
basis for the balance of the season.  In Victoria, the major milk
producing region of the country, annual output was down 7.5% when
compared to the previous year.  Output in Victoria accounted for
63.5% of total Australian production which was down 2.6% from the
2005 - 2006 season.  Australian dairy product production, with the
exception of butter (+11.8%), trailed the previous season:
butteroil -40.8%, skim milk powder -6.8%, buttermilk powder
-14.9%, whole milk powder -14.5%, cheese -2.9%, and whey powder
-12.4%.  As the new milk production season gains momentum, some
early season shipments are being delayed due to insufficient
supplies.  Most manufacturers and handlers are not overly alarmed
at this situation and are optimistic that during the next few
weeks or so, milk output will pick up and lighter early season
milk volumes will be recovered.  Manufacturing plants in New
Zealand are starting up across both the north and south islands.
At this time, when possible, milk is often being directed toward
milk powders with other manufactured dairy product production
gaining momentum as milk volumes increase.  For the most part,
manufactured dairy product stocks for the first half of the
current production season have been fully committed.  Suppliers
and customers are now working on second half needs.  These
negotiations are not developing as strongly as desired by
customers.  Most buyers are concerned about a supply commitments
versus price at this time.  Significant increases in opening
payout prices have been announced in both New Zealand and
Australia which are giving farmers an optimistic outlook on the
upcoming season.

0930c steve Schneeberger  (608)250-3204

---

STAT News Service