Oceania Dairy Market Overview

MADISON - Aug 28/14 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
Australian milk production is continuing to build with some manufacturers
showing intake volumes just above year ago levels.  The good weather and
forage conditions that led to the strong finish for the 2013-14 season have
prevailed and have led to a good start to the new season.  Temperatures are
increasing and will improve pasture grass growth in the major dairy producing
states.  Dairy markets and manufacturers are still adjusting to the impact of
the Russian embargo on Australian imports.  Manufacturers are still making
butter and skim milk powder in lieu of whole milk powder, due to the better
returns, but the marginal advantage is declining.  The Russian ban has raised
concerns with producers that farmgate prices could be at risk, but various
manufacturers are attempting to reassure producers that the outlook for the
newly started season remains positive and should provide for step ups, rather
than step downs in pricing.  Various manufacturers have capacity available
and are looking to expand their milk supply.  According to Dairy Australia,
July 2014 milk production in Australia was 1.5% above July 2013. The state
changes from a year earlier are: New South Wales, +4.4%; Victoria, +2.2%;
Queensland, -8.1%; South Australia, -5.2%; Western Australia, -0.9% and
Tasmania +7.1%.
New Zealand's milk production is showing weekly increases.  Overall
production volumes are just above year ago levels.  Farmers are very busy
with calving on both the North and the South Islands.  Weather conditions are
cool and wet, making calving and producer operations marginally difficult.
The lower milk prices to start the season have narrowed producer margins
significantly and will cause producers to be much more cautious in their
purchases of feed and seed.  The accelerated declines in skim milk powder
prices are prompting some manufacturers to consider swinging production to
whole milk powder.  Butter and AMF prices showed strength on the prospects of
increased buying from Russia.
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