Oceania Dairy Market Overview

MADISON - Sep 25/08 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Seasonal milk production in Oceania continues to
build.  In New Zealand, moisture continues to fall, although more sun
is appearing, thus pastures and walkways are becoming less saturated.
Early indications are that milk output appears to be on schedule with
projections.  Milk producers and handlers continue to project milk
production to be 6 - 7% heavier than last year and build on the 2006 -
2007 by 2 - 3%.  In Australia, the milk production season is still in
the very early stages of increases.  Milk handlers indicate that July
output was stronger than the previous year by 6.5% and report that
August output was also positive.  At this point, production
projections for the season are basically unchanged from earlier
projections of a 1% increase over last season.  Moisture, or lack of
moisture, continues to be a concern for most dairy producers.
Rainfall has been occurring during the winter season, but not
significant enough to replenish greatly reduced water reserves.
Pastures are greening and early grass growth is positive, but water
availability for later in the season is what concerns producers the
most.  New stocks of manufactured dairy products are starting to be
generated.  Manufacturers and handlers indicate that some stocks are
clearing the Oceania region, although volumes are not as fully
committed as usual for this time of the season.  Buyers are hesitant
to commit to significant volumes at this time as prices for most
products are weakening.  At this point, most Oceania traders and
handlers are not overly concerned with sales activity, although they
do hope that dairy markets will stabilize soon so that normal activity
will resume.  Many traders and handlers are discussing the dairy
situation in China and what impact this may have on imports into that
region.  Oceania traders question the level of buyer confidence
Chinese consumers have with other dairy products and its' impact on
their dairy industry.  They are also concerned about consumer
acceptance of imported items.  Most traders indicate that it is still
early for many of these concerns and questions to be answered and
realized.

0930c steve Schneeberger  (608)250-3204

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STAT News Service