Oceania Dairy Market Overview

MADISON - Jan 17/08 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production is on the downside in both New Zealand and
Australia.  Recent hot weather patterns in Australia and now hot and dry
conditions in New Zealand may potentially accelerate the decline.  In New
Zealand, milk production is estimated to be at 77% of the annual peak at mid
January.  Milk handlers state that milk receipts thus far in January are lower
than projected.  In Australia, November milk production figures indicate that
cumulative milk output is down 7.9% for the first five months (July -
November) of the current production year.  Although the cumulative total is
lower than last year, November's output was not down as much as October's.
Milk handlers project that official milk output figures for December will also
not be as negative, thus negative cumulative totals will hopefully narrow.
Manufacturing schedules within Oceania are seasonally active and basically in
line with projections.  The potential for faster than anticipated milk
production declines could significantly alter second half manufacturing
projections.  At this point, most operations are functioning at or very near
peak levels.  In New Zealand, milk volumes are sufficient to maintain casein
production, although this production season could come to a close sooner than
projected, especially if milk volumes dry up quicker than anticipated.  Casein
is the product that comes on late in the season as milk output builds and is
the first product to cease production on the down side of the milk production
season.  At this point, manufacturers and handlers state that stocks are
generally in close balance with needs and very little, if any, surplus is
being realized for potential spot buyer interest.  Most handlers and traders
are proceeding very cautiously to not over commit and refer to current
business as their "core" business.  Prices are often holding steady, although
weakening trends in other international markets are causing some adjustments
to occur.

0930c steve Schneeberger  (608)250-3204

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STAT News Service