Oceania Dairy Market Overview

MADISON - Oct 25/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  The milk production season continues to grow in
Oceania.  In New Zealand, some milk handlers feel that the milk
production season might have peaked about two weeks ago, about 2 weeks
earlier than anticipated.  Handlers state that milk volumes are
running 1 1/2 - 2% heavier than last season at this time, but lower
than the 2 - 3% projected.  At this point, milk intakes at most plants
are maintaining steady/high levels, although cool temperatures and
minimal sunshine could accelerate an earlier than projected decline.
In Australia, conditions at the start of the 2007-2008 season were
generally favorable; strong opening milk prices, good fall and early
winter rainfall in most dairy regions, and a significant increase in
winter crop plantings.  However, limited follow up rainfall from July
onward has meant a very dry winter and early spring in much of
southeast Australia.  These conditions have significantly impacted the
expected size of the winter grain harvest.  Also water storage levels
are very low, with limited irrigation allocations and very high
temporary water prices.  Encompassing these situations, the benefits
of this season's historically high milk prices are quickly being
eroded.  Australian milk production figures for the first two months
(July - August) of the current season indicate that output is trailing
last year by 9.0%.  Although this figure is significant, one must not
forget that the 2006 - 2007 season realized a very positive start.
Current conditions in Australia remain dry and warmer than usual
temperatures for this time of the season are not helping the new milk
production season develop positively.  In both countries, traders and
handlers are very cautious to not over commit to the international
market.  New Zealanders anticipate export volumes above last season
with Australian's being more cautious.  Prices for manufactured dairy
products in Oceania are holding steady to slightly firmer.  Stocks are
limited to commitments at this time with basically no spot supplies
available.

0930c steve Schneeberger  (608)250-3204

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STAT News Service