Oceania Dairy Market Overview

MADISON - May 22/08 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production in the Oceania region is nearing
seasonal low levels.  Milk producers and handlers in New Zealand
indicate that overall milk volumes on the two islands are about 18% of
peak levels.  Due to drought conditions during the second half of the
season, milk volumes are running 10 - 11% of peak production on the
North Island. Handlers continue to project that total milk volumes for
the season will be around 4% lower when compared to last year, with
some speculating that the decline might even be greater.  In
Australia, the season also continues to wind down.  Official milk
production figures for the first nine months (July - March) indicate
that cumulative output is running 5.6% behind last season.  Although
this figure is negative, it is much better than earlier in the season
when output trailed the previous year over 9%.  This negative figure,
in comparison to the previous year, is narrowing each month and with 3
months left of the official data, milk handlers project that annual
volumes will trail last season by about 5%.  Traders and handlers
indicate that sales activity is basically centered around internal or
domestic needs with international, previously negotiated, business
clearing stocks from inventory.  Most Oceania suppliers feel that they
will be able to fill commitments from inventoried stocks with little
outside help anticipated.  Suppliers do indicate that carryover stocks
will be lighter this year than last.  Some traders and handlers state
that buyer interest for these carryover stocks appears to be more
active than in recent years.  Most feel that they will not have any
difficulty in clearing the warehouses before new production begins to
enter.  With the current season nearly at an end, milk producers and
handlers are already preparing for the upcoming season.  Most all
manufacturing facilities are running at very minimal processing
schedules with many already shuttered for the season.  This is the
time of the year when annual maintenance is performed and equipment is
readied for the upcoming season.  New Zealand producers and handlers
are optimistic about the upcoming season and project that milk output
will quickly rebound from this year's negative situation.  In
Australia, moisture is often not occurring at desired fall levels,
thus some handlers and producers are not as optimistic as they were a
few weeks ago.  Some indicate that if they do not get measurable
moisture within the next 3 - 4 weeks, minimal milk growth will
probably be the situation for 2008 - 2009.

0930c steve Schneeberger  (608)250-3204

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STAT News Service