Oceania Dairy Market Overview

MADISON - Dec 4/14 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
Australian milk production is beginning to trend downward, but remains above
year ago levels.  Persistent dry conditions in western Victoria and dry
weather in Tasmania over the past fortnight may accelerate the downward trend
in the coming weeks.  The milk production forecast by some cooperatives
remains around 2% above last year.  Some badly needed rains covered some of
the dairy producing areas of Victoria and the southern portions of New South
Wales.  The rains will help pasture and forage growth, but are hampering the
barley harvest.  Hay harvest activities are well underway in the dairy
producing regions and yield assessments are variable, but generally below
average.  Demand is strong for 2015 hay supplies with current prices steady
to firm.  The recently signed Free Trade Agreement with China will benefit
infant formula manufacturers with a phase out of the current 15% tariff over
the next four years.  The GDT auction will begin offering Australian skim
milk powder beginning in January 2015 with trading event 132.  According to
Dairy Australia, October 2014 milk production in Australia was 6.0% above
October 2013. The state changes from a year earlier are: New South Wales,
+6.5%; Victoria, +5.3%; Queensland, -3.4%; South Australia, +0.5%; Western
Australia, +5.8% and Tasmania +17.8%. Australia's milk production season to
date (July-October) is +3.8%, compared to last season.
Milk production in New Zealand is moving lower with steeper declines noted on
the South Island.  Milk production is above year ago levels and manufacturers
are busy processing current milk volumes.  Farmgate prices are lower this
season, compared to last with many producers forgoing supplemental feeding.
This situation may lead to a shorter season as producers may dry off cows
earlier in light of the marginal returns on extended production.  Some New
Zealand cooperatives have increased their investment in milk powder, infant
formula and UHT processing.  The additional investments by these cooperatives
will help reduce their exposure to the more volatile bulk commodity prices.
October milk production as reported by DCANZ was 3.30 million MT, up 4.5%
from October 2013 and 10.2% higher than the level two years ago.  October
milksolids reflected a 5.4% increase compared October 2013.  At the December
2 GDT event #129, average prices ranged from 7.1% lower to 9.3% 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,
$3,817 +9.0%; butter, $2,849 +7.3%; buttermilk powder, $2,560 +8.8%; cheddar
cheese, $3,017 +5.2%; lactose, n.a.; rennet casein, $7,255 +9.3%; skim milk
powder, $2,423 +5.7%; sweet whey powder, $1,205 n.a.; and whole milk powder,
$2,229 -7.1%.
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