Oceania Dairy Market Overview

MADISON - Dec 18/14 - 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, but remains above year ago
levels.  Seasonal production forecasters are calling for a 1%-2% gain over
last year.  In contrast to last year, more milk is being channeled to SMP and
cheese production in lieu of WMP production, due to the better returns.
Below average rainfall over most of the country, in combination with
increasing temperatures, is beginning to pressure dairy producers to start or
increase supplemental feeding.  The recently concluded Korea-Australia Free
Trade Agreement may boost Australian exports in the near future, due to an
early introduction of reduced tariffs.  Hay harvesting is near completion in
most areas.  In general, quality was up, but volumes were down.  Hay prices
are variable and dependent on region and rainfall within the region.  Good
quality hay is in good demand.  Producers in the dry areas of Victoria have
begun feeding their 2014 silage, which is earlier than usual.  Dairy
Australia reports dairy product exports for the July-October period totaling
225.5 thousand MT, up 2.5% from the year ago period. The skim milk powder
(SMP) exports were up 28% from the same period last year. The total value of
exports for the July-October period is down 8.8%.
New Zealand milk production remains above year ago levels, but the increases
over last year's levels are declining.  Lower export prices for milk powders
have led to significantly lower farmgate prices compared to a year ago.
Producers are taking measures to reduce costs wherever possible.  It is
likely that supplemental feeding will be reduced or eliminated and the milk
production season will be shortened as cows are dried of more quickly than
last year.  Some cooperative forecasters have significantly reduced this
season's forecast to show no increase over last year, due to the bearish
factors now affecting milk production.  Rabobank's December Rural Confidence
Survey shows dairy producer expectations for their farm business performance
at its lowest since 2009.  At the December 16 GDT event #130, average prices
ranged from 9.5% lower to 10.8% 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, $4,200 +10.8%; butter,
$3,145 +10.4%; buttermilk powder, $2,466 -9.5%; cheddar cheese, $3,002 -0.6%;
lactose, n.a.; rennet casein, $7,576 +4.5%; skim milk powder, $2,320 -3.2%;
sweet whey powder, n.a.; and whole milk powder, $2,270 +1.4%.
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: http://www.marketnews.usda.gov/mnp/da-home

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STAT News Service