Oceania Dairy Market Overview

MADISON - Apr 10/14 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
AUSTRALIAN milk production is trending lower, approaching seasonally low
levels, typically seen from April through June.  The autumn rains have yet to
arrive, restricting forage growth in non-irrigated fields.  Temperatures
remain fairly warm, so if timely rains do arrive, there may be a marginal
bump up in milk production.  Producer margins remain positive, but are
narrowing as feed costs are inching higher.  Numerous dairy manufacturers are
focused on the production of butter and various cream products for the
upcoming Easter/Passover holidays and, as a result, milk powder production
has been focused on skim milk powder, rather than whole milk powder.  The
recent trade agreement between Australia and Japan met a cool reception with
numerous members in the Australian dairy industry, because of the lack of
movement on tariff levels for fresh cheese.  According to Dairy Australia,
February 2014 milk production in Australia was 1.5% above February 2013. The
state changes from a year earlier are: New South Wales, -7.9%; Victoria,
+4.3%; Queensland, -7.9%; South Australia, -7.4%; Western Australia, -1.8%
and Tasmania +7.9%. Australia's milk production season to date is -1.8%,
compared to last season.  Dairy Australia states exports for the July-
February period total 490.8 thousand tons, down 9.2% from the year ago
period. The largest export categories are skim milk powders (SMP) and whole
milk powders (WMP). The total value of export is 19.7% higher over the prior
year period. The highest value items are WMP and SMP.
NEW ZEALAND milk production trends are mixed between the North and South
Islands, but overall milk production remains very positive with March
production estimates near 7% above year ago levels.  The North Island is
becoming increasingly dry, causing decreases in production due to decreased
forage regrowth.  Producers are managing and culling their herds to maximize
milk production with the available feed supplies.  The situation on the South
Island is significantly better, with adequate rains and good pastures.  The
prolonged milk production season has allowed dairy product manufacturers to
build adequate supplies to cover contract needs for the upcoming carryover
period.  Large investments are being made to increase whole milk powder
manufacturing in New Zealand for the next season.  Producers are also looking
to expand herds and increase milk production.  Dairy Product prices have
weakened, due to global milk production increases and a decline in sales to
China following their significant milk powder purchases during January and
February.  At the April 1 GDT event #113, average prices ranged from 15.0%
lower to 5.5% higher from the prior event across categories. The all
contracts price averages (US$ per MT) and percent changes from the previous
average are:  anhydrous milk fat, $4,062 -11.3%; butter, $4,040 -11.0%;
buttermilk powder, $4,211 -15.0%; cheddar cheese, $4,438 -3.5%; lactose,
$1,530 n.a.; milk protein concentrate, $8,436 -4.3%; rennet casein, $11,105
+5.5%; skim milk powder, $4,126 -9.6%; and whole milk powder, $4,033 -8.4%.
0930C rick.whipp@ams.usda.gov 608.278.4151
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: www.ams.usda.gov/dairymarketnews
Dairy Market News database portal: www.marketnews.usda.gov/portal/da

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STAT News Service