Oceania Dairy Market Overview

MADISON - Feb 19/09 - 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 continues to
decline.  Production estimates continue to be adjusted lower.  In New
Zealand, current annual production estimates are running 4 - 5% over
last season with Australian estimates settling in the 1% above last
season range.  During the past two weeks, record setting temperatures
in both Australia and New Zealand will have the potential to
accelerate the decline.  At this point, milk handlers are not
reporting any significant impact, but do acknowledge that receipts at
some facilities are lower.  Although the temperatures have been hot,
contacts indicate that this is the summer season and this has been and
is a good run of summer weather.  As of February 1, pay out prices for
milk have basically been cut across the board in both countries.
Producers are not pleased with the adjustments, but also acknowledge
that a large percentage of their annual output was generated at higher
levels, thus lower milk volumes at this time of the season will garner
the lower prices.  Many producers are trying to figure out what will
be the best way to conclude this season and prepare for next season.
Some are considering drying off the herd earlier than usual.  In
Australia, the bush fires of the past few weeks in Victoria have
impacted about 50 farms.  Three farm houses were lost with about 70
cows or heifers lost and another 30 still under vet care.  The major
fire impact for dairy farmers was from loss of hundreds of hectares of
pasture, some fodder, and damage to fence rows.  Some manufacturing
facilities in the fire affected areas were shuttered for a few days
due to excessive smoke in the area with milk being rerouted to other
facilities.  Reports of under control fires continue to occur and
conditions are stable for the dairy industry.  Traders and handlers of
manufactured dairy products are indicating that buyer inquiry is
increasing.  Additional spot sales are occurring with no significant
sales being reported at this time.  Traders and handlers indicate that
buyers are fully aware that current price levels are not sustainable,
thus many are feeling that a floor might be at hand.  Suppliers state
that price increases might be in the near future, especially if stocks
continue to clear Oceania shores.  With renewed buyer interest, many
Oceania suppliers are not as concerned about uncommitted stocks as
they were a few weeks ago.

0930c steve Schneeberger  (608)250-3204

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STAT News Service