Oceania Dairy Market Overview

MADISON - Jul 2/14 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
Australian producer strategies are in transition as June and the 2013/14
season conclude.  Producers are no longer trying to extend milk production
and chasing the higher milk prices with the onset of lower farmgate prices
for the new season.  Weather has changed from mild conditions to a more
normal pattern with colder, wetter weather covering the major dairy producing
regions in southeastern Australia.  Dairy commodity stocks are being worked
lower with a few extra spot sales occurring as manufacturers adjusted
inventories prior to the end of the fiscal year. Overall, dairy commodity
trading is fairly light as Middle Eastern countries are observing the Ramadan
holiday and Chinese purchases are relatively low.  A number of Australian
cooperatives have announced their opening milk prices for the 2014/15
production season with prices ranging from $5.80-$6.40 AU$ per kilogram under
varied pricing structures.  While commodity prices have declined and
beginning season farmgate prices are lower, producer margins continue to be
supportive of investment and expansion.  Some forecasts are calling for a 2%
growth in Australian milk production for the 2014/15 season.  Many
cooperatives are expecting June milk production totals to be above year ago
levels.  According to Dairy Australia, May 2014 milk production in Australia
was 8.2% above May 2013. The state changes from a year earlier are: New South
Wales, +2.2%; Victoria, +10.8%; Queensland, -5.2%; South Australia, +2.0%;
Western Australia, -4.5% and Tasmania +17.6%. Australia's milk production
season to date (July-May) is -0.2%, compared to last season.
New Zealand's April milk production as reported by DCANZ was 1.29 million
tons, up 32.8% from April 2013, but 13.0% lower than two years ago.  Current
milk production is low with a majority of cows on winter pastures.  Weather
patterns have turned cold and wet.  Recent rains have promoted good pasture
growth and producers are looking forward to a good start of the 2014/15
season.  Dairy product stocks are being worked lower over the carryover
period with some spot sales occurring as manufacturers clean up uncommitted
loads at the close of the fiscal year. Negotiations are ongoing for Q4
supplies for a variety of dairy commodities with some manufacturers anxious
to get some sales on the books.  New season farmgate prices have been
announced and, though lower than prices paid at the close of last season, are
relatively high, compared to prices paid at the beginning of previous years.
A cooperative is shifting production away from whole milk powder for the next
few months.  The production shift will cause increases in skim milk powder,
butter, and AMF production. It may also stimulate some increased buyer
interest in the whole milk powder market.  Some market analysts see the move
as an attempt to offer more SMP to the Asian market and more butter to the
U.S. market.  At the July 17 GDT event #119, average prices ranged from 13.6%
lower to 4.0% 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, $3,606 -7.4%; butter, $3,181 -13.6%;
buttermilk powder, $4,135 +4.0%; cheddar cheese, $4,226 -2.9%; lactose, n.a.;
milk protein concentrate, n.a.; rennet casein, $10,789 -2.1%; skim milk
powder, $3,810 -0.9%; and whole milk powder, $3,459 -5.4%.
1300C 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