Oceania Dairy Market Overview

MADISON - Jun 11/09 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:

The NZ milk production season is winding down.  Seasonal weather
conditions have stifled the milk output and remaining cows are
being dried up.  Current output is mainly being for the carryover
or fresh product needs.  Totals are running 7.5% ahead of last
year's drought affected output and around 2-3% above levels of
two seasons ago.  Dairy products are mostly committed for the
season.  Heavy rains and flooding in Australia have impacted
parts of the dairy regions with over 120 dairy farms affected.
Milk output in Australia is moving seasonally lower at levels
similar to last year at this time.  April output totaled 2.2%
higher than a year earlier with seasonal production through April
also tracking 2.2% higher.  The majority of the current output is
being utilized for local markets.  Opening milk prices for the
new season beginning in July are expected to be lower when
announced.  Dairy product sales and inventories are being
adjusted due to the end of coops and other firms' fiscal years at
the end of June.  Currency valuations are creating more costs in
exporting dairy products and hurting returns.  Butter prices are
steady to lower.  Export sales have slowed as most products have
been committed.  Buying interest has been light as both the EU
and the U.S. have export subsidies in place.  On June 8, the U.S.
DEIP announced bonuses for butter at $450 US and for anhydrous
milkfat, butteroil, and ghee at $650 US per MT.  World butterfat
interest is often subdued with the subsidies available.  Skim
milk powder pricing is unchanged.  The market export subsidies in
the EU were increased and U.S. DEIP NDM sales were announced,
creating more market tension.  Supplies are mostly committed in
the Oceania region with demand decent for offerings.  Current
drying schedules have moved lighter to match the milk supplies.
The whole milk powder markets are weaker and somewhat messy.
Recent pricing strength has been erased by recent events within
the region and globally.  The results of the most recent global
DairyTrade auction were pegging WMP at levels 12% below the
previous auction.  The available offerings from the region are
limited.  Increases in EU export subsidies also factor in.
Cheese prices are mostly steady.  With most product committed,
there is limited business left to transact.  Most customers are
covered forward; although there is limited demand on the global
front.  Product is moving well to traditional customers.

0930CT butch.speth@ams.usda.gov 608.250.3202

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STAT News Service