Oceania Dairy Market Overview

MADISON - Jan 31/08 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  The milk production season in Oceania continues to decline.
Dry and hot conditions in both New Zealand and Australia are not helping
second half production projections.  New Zealand producers and handlers are
concerned about the rate of decline and are hopeful that cooler temperatures
and moisture will occur very soon to slow down the decline.  Contingency plans
are starting to be considered if current negative trends continue.  New
Zealand contacts indicate that with little decent rainfall in the central part
of the North Island, some farmers are thinking once per day milking may not be
too far away.  While conditions in New Zealand are not an Australian
situation, it is getting serious and with no decent rain on the short term
horizon, it is hard for many to see how they can recover.  December milk
production figures for Australia were recently released which indicate that
milk volumes continue to trail year ago comparables, but the negative
cumulative total is narrowing.  During December, milk output trailed last
December by 3.5%.  Cumulatively, output for the first six months (July -
December) of the year is down 7.2% from the same period last year.  In
Victoria, the major milk producing region of Australia, December output
trailed last December by 3.3% and is down 7.5% on a cumulative basis for the
six month period.  Although output continues to trail comparable periods, the
negative gap on a monthly and cumulative basis is narrowing.  Traders and
handlers report that there is basically no new information pertaining to the
supply/demand situation.  Stocks remain basically fully committed for the
balance of the season with no surplus/uncommitted volumes projected to become
available as the production season winds down.  Many are concerned, especially
in New Zealand, that faster than projected milk production declines may
jeopardize late season commitments.  At this time, most are closely monitoring
the situation and are especially not committing to additional or new buyer
interest.

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STAT News Service