Oceania Dairy Market Overview

MADISON - Nov 21/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  The milk production season in New Zealand continues
to hold at peak levels.  Most feel that this is the true peak where as
the leveling of production in October was just a pause for further
growth to follow.  In Australia, conditions are basically no better
than they have been for much of the season.  The significant rainfall
of a few weeks ago did, for a short time, increase catchment volumes
and greened pastures somewhat.  Since that time, very little, if any,
additional moisture has fallen.  Moisture that has fallen has been
sparse and spotty throughout the dairy regions of Australia.  The less
than 1% increase in volumes in catchment basins was quickly dispersed
throughout the region with water levels once again very low.  Revised
production estimates for the 2007-2008 season in Australia are now
pegged to be 5% lower than last season with probably more downside to
occur rather than upside.  Manufactured dairy product production in
Australia for the first three months of the year (July - September)
shows all manufactured products to be lower than the same period last
season.  Manufacturers and handlers are not overly optimistic about
total recovery from this trend.  In Oceania, stocks of manufactured
dairy products are basically limited to commitments made early on in
the milk production season.  In Australia especially, traders and
handlers are very cautious to not sell forward too far to avoid over
committing.  Again, it will be a case of the companies prioritizing
product mixes and customers and meeting these demands only.  Oceania
traders and handlers are aware of weakening prices in Europe and are
watching closely how this may impact their prices.  At this point,
Oceania prices have basically maintained themselves at levels of past
weeks, but a possible flow of product for an international market
might encourage Oceania prices to adjust to remain competitive.  Most
feel that the volume of product within Europe is late season
uncommitted production and is not significant enough to cause prices
to remain low.

0930c steve Schneeberger  (608)250-3204

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STAT News Service