Oceania Dairy Market Overview

MADISON - Mar 4/04 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production in Oceania continues to decline seasonally,
although end of season declines are gradual at this time.  Milk handlers are
hopeful that the declines will continue to ease slowly to help offset overall
shortages on the season.  In Australia, year to date production continues to
trail last year by about 6 - 7%, although recent production trends should
hopefully narrow the gap between the years.  In New Zealand, recent rainfall
has helped maintain pasture growth as the season winds down, thus production
continues to run 2 - 3% ahead of last year.  In both countries, manufacturers
are actively processing milk volumes and in most instances, are generating
much needed product to meet commitments.  As has been the case for most of the
season thus far, stocks of manufactured dairy products are in close balance
and often referred to as tight.  Manufacturers and traders indicate that the
additional milk volumes at this time of the year will help ease the supply
tightness against known commitments.  At this point, most dairy product
handlers continue to indicate that they have no additional product available
for spot buyer interest, although there are buyers in the market looking for
product, especially butter.  Firm butter prices in the United States are
causing U.S. importers to look for butter internationally.  In recent years, a
significant volume of quota butter has come into the United States from
Oceania.  Much of this activity will continue, although non quota (high tier)
volumes are what many importers are looking to locate.  In 2001, butter prices
were comparable and higher causing 26 million pounds of non quota butter to
enter the States, with much of this coming from Oceania.  This year, it
appears that tight supplies in Oceania will limit this source for non quota
volumes, or at least until closer to the end of the season.

0930c steve schneeberger  (608)224-5084

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STAT News Service

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