Oceania Dairy Market Overview

MADISON - Dec 20/07 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  New Zealand milk receipts continue to edge lower
after the annual peak.  Milk receipts for the current season continue
to run about 2% above year ago levels though still below the preseason
forecast.  Dry conditions in parts of both the North and South Islands
may soon affect pasture quality and impact milk output.  In the
northern half of the North Island, rain has been more plentiful,
though warmer temperatures are affecting cow comfort and may also
start to more heavily impact milk volumes there.  Most dairy
commodities remain at least steady with the exception of skim powder
where increased offerings from other sources such as the U.S. are
giving buyers alternatives to consider.  Good international interest
is noted for whole milk.  Product being produced currently is being
delivered under contracts made earlier so prices are not an accurate
reflection on current market prices.  Some product is, as usual,
inventoried for late season shipment.  Limited volumes of anticipated
late season product have yet to be contracted, though efforts continue
to produce the products with the best returns.  Any late season sales
are being made to fill demand from regular accounts with no other spot
sales expected.  Production reductions are occurring in products,
mainly those with the lower returns, as milk receipts decline
seasonally.  In Australia, milk receipts for the first 4 month of the
new production season starting in July are down a cumulative 8.5% with
the latest month down just over 9%.  For the season, the forecast is
only for a 5% decline.  Receipts in Victoria, the major milk producing
state, are close to the national numbers.  Some rain has been falling
to help replenish reservoirs and green up conditions, but larger
amounts are still needed.  Much of the rain has come too late for the
crops.  Many producers have held back on irrigating pastures to save
the water for late season irrigation.  Delays in dairy product
shipments from Australia are common so producers are wary about over-
committing on additional sales for late season delivery.  The current
production focus is on cheese.  Milk prices are higher to help
compensate for higher feed and water expenses.

0930C George Koerner 608-250-3205

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