Oceania Dairy Market Overview

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

OCEANIA OVERVIEW:
AUSTRALIAN milk production for November, according to Dairy Australia, was
2.9% lower than November 2012.  The state changes from a year earlier are:
New South Wales, -5.6%; Victoria, -2.3%; Queensland -9.1%; South Australia -
4.6%; Western Australia -3.6%; and Tasmania -0.6%.  July to date totals show
Australia down 3.9% with all states below the previous year's production.
Weather continues to be favorable for milk production with hopes of closing
the production season with stronger production totals than last year.  Most
favorable estimates, given good weather, still peg Australia's production to
be 1-2% below last year.  Market activity was very light over the last
fortnight, due to the yearend holidays.  Dairy product prices have held
mostly steady with some underlying firmness seen in skim and whole milk
powders.  Supplies for most dairy products are tight through the first
quarter of 2014.  Chinese buyers appear to be on the verge of purchasing
Australia's largest privately-owned milk supplier.  Other Australian dairy
assets have also become targets of possible purchase by Chinese buyers as
China looks to expand dairy operations.
NEW ZEALAND milk production continues to pace itself above last year's levels
by nearly 6%.  The close of the current season should see milk production
well above last year's drought stricken finish.  The Dairy herd in New
Zealand has rebounded from last year's drought with Statistics New Zealand
pegging the dairy herd at 6.6 million head, up 27% from 2006.  Other
livestock numbers showed slight declines in 2013, an indication that
conversion to dairy operations is ongoing.  Market activity over the yearend
holiday period has been light and prices have held mostly steady.  Dairy
product supplies are viewed as tight with a majority of first quarter
production committed.  News reports out of China, indicating new regulations
imposed by China's Food and Drug Administration may limit domestic milk
powder supplies, are giving the dairy markets a firm undertone.  The
situation in China has increased buying focus on New Zealand's remaining
available supplies.  One contact indicated current dairy demand is contingent
on what China will do.  The GDT auction has taken an extra week hiatus over
the holiday period and will conduct the first auction event of 2014 on
January 7.
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