Oceania Dairy Market Overview

MADISON - Mar 28/13 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
NEW ZEALAND milk output is trending lower as severe drought
conditions impact the milk producing areas of the North Island
and expand to other areas.  The milk production season is
winding down.  Some trade analysts are predicting that milk
production in the final months of the current season could be up
to 15-20% lower than last year with seasonal totals falling off
of last year's total by 1-2%.  Dairy farmers are drying off
herds earlier than planned and sending more stock to slaughter
as a result of limited feed potential in the dry pasture
conditions and against the economics of supplemental feeding.
Additionally, farmers want both the pastures and the cows to be
in good shape for the next season.  Some pastures may need to be
resodded or reseeded to recapture the grass stands.  AUSTRALIAN
milk production figures are trending lower than year ago levels.
Conditions have become harder for milk output across most
regions.  Lack of moisture and the sustained heat have taken a
toll on the dairy herds.  Milk supplies are contracting and milk
is moving to plants to fill export orders and for local consumer
products.  February milk production for Australia was down 8.8%,
as-is, unadjusted for the leap day in 2012).  Adjusted, the
change would be down 5.4%.  Milk production was down in all
regions on an as-is basis, albeit would be up only slightly in
one region (New South Wales) on an adjusted basis.  Season to
February (as-is) output is trailing year ago marks by 1.1%.
Dairy product prices are again sharply higher this reporting
period with the market tone mirroring firmness in the gDT
auction prices.  The impact of lower offering volumes and the
unmet demand is helping to put pricing averages higher.  Buyers
who do not have their positions covered and those who need NZ
specific products are seeking dairy products for their need.
There are concerns that the higher dairy product prices will
reach a point to curtail demand.  g/Dt:  At the March 19th g/DT
session #88, average prices for all products traded and
contracting periods were higher and were sharply higher for
whole milk powder.  Average prices for all contracting periods
and individual products ranged from 3.1% to 21.2% higher.  The
all contracts price averages (per MT) and percent changes from
the previous average are:  anhydrous milk fat, $4,416 +16.3%;
butter, $4,550 +11.5%; buttermilk powder, $3,904 +8.6%; cheddar
cheese, $4,315 +13.7%; lactose, not traded; milk protein
concentrate, not traded; rennet casein, $9,242 +3.1%; skim milk
powder, $4,050 +7.7%; and whole milk powder, $5,116 +21.2%.  The
next event, #89, will be on April 2.
0930c Butch Speth Butch.Speth@ams.usda.gov 608.278.4152

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STAT News Service