Oceania Dairy Market Overview

MADISON - Jul 3/08 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Winter weather patterns in the Oceania region will
provide a good indication as to how the start and the upcoming milk
production season will develop.  At this time in New Zealand,
temperatures are colder than usual and moisture is not abundant,
although milk producers and handlers are reporting that the winter
season is basically normal.  Moisture is sporadic, but has fallen in
most dairy areas of the two islands.  Although rainfall has occurred,
most indicate that additional volumes would be great to rebuild
depleted subsoil volumes.  Winter moisture will also help winter crops
and establish good pasture growth.  Some producers anticipate that
colder than usual winter temperatures may slow the start of the
upcoming milk production season.  In Australia, lack of moisture
during the winter months is also a major concern.  Some moisture has
fallen in most dairy regions, although much lighter than needed.
Winter moisture is crucial for winter crops and establishment of
pastures for the upcoming season, let alone re-establishing greatly
depleted volumes in catchment basins.  Although moisture, or lack
there of, is a critical element for the dairy industry, most producers
are optimistic about the upcoming season.  In New Zealand, milk
handlers are projecting milk volumes for the 2008 - 2009 season to run
between 2 - 3% ahead of volumes during the 2006 - 2007 season.  Most
feel that the drought of last season may impact production, but are
hopeful that this down tick will be quickly recoverable.  In
Australia, farmers are also optimistic and project milk output to
increase 1 - 1 1/2% above last season.  A strong finish to the current
season will hopefully enhance the start of the new season.  Some
Australian milk handlers have announced their opening farm gate prices
to be 5 - 15% higher than last year.  Annual 2007 - 2008 production
figures are being calculated and New Zealand's output will trail last
year by about 4%.  With this month to go in Australia, milk producers
and handlers are projecting milk output to trail last season by about
5% with some projecting this figure to dip under 5%.  Sales
negotiations for manufactured dairy products out of Oceania continue,
although suppliers remain cautious to not over commit and buyers are
hesitant to commit to locked prices for too far into the future.
Currently, much conversation is centering around the Japanese
immediate need for butter.  Oceania suppliers state that they will not
be able to supply any butter to Japan for at least two to three
months, but feel that after that time, volumes should be available.
Opinions vary on how long this emergency will take to fill, but some
feel that it will be short lived while others feel that this could go
on for a year or longer.  Traders and handlers speculate that this
current situation has developed due to the shifting of milk away from
butter/powder and towards cheese in recent months.

0930c steve Schneeberger  (608)250-3204

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STAT News Service