Oceania Dairy Market Overview

MADISON - Jan 30/14 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
AUSTRALIAN milk production is facing weather related challenges that are
accelerating the seasonal decline in milk volumes.  Another heat event is
covering a majority of Victoria and New South Wales with temperatures in the
high 30's to mid-40's Celsius (+100 Fahrenheit).  The current heat wave comes
at a time when milk production was experiencing a rebound from a previous
heat event 7 to 10 days ago.  The intense heat has caused milk production
reductions of 10% or better in some areas along with isolated instances of
cattle fatalities due to heat exhaustion.  Those areas in northern Victoria
that benefit from irrigation have seen less of an impact on milk production,
due to the heat.  In the northeastern part of the country, an approaching
cyclone is threatening Queensland with strong winds, heavy rains and the
likelihood of flash floods.  December's preliminary milk production estimates
range +1-1.5%, compared to the same period a year ago.  Prices for dairy
products are stable to firm, supported by good demand and tight supplies.
China continues to be very active in all dairy markets and appears to pursue
any and all dairy products available on the market. Australia's oldest dairy
producer has been purchased by a Canadian firm, ending a prolonged three way
competition to take over control of the company.
NEW ZEALAND milk production in November was reported by DCANZ at 2.96 million
tons, up 4.0% from November 2012 and 11.9% higher than two years ago.
Current milk production levels are holding up as weather has not been a
factor.  Recent rains on the North Island have been beneficial to those areas
that had been dry over the past few weeks.  The next 4-5 weeks will be
critical in just how well this year's production season has fared.   If the
weather continues to be a non-factor, some producers are estimating that milk
production could be as high as 8% over last year's drought stricken season.
The increase over last year's production is welcome as manufacturers continue
to build supplies to cover the carryover period, typically June, July and
August.  Prices for all dairy products are firm with most supplies for Q1 and
Q2 committed.  China has remained active in the dairy markets, which is a bit
unusual with the Chinese New Year beginning at the end of the week on January
31.  Global demand continues to be very strong for nearly all dairy products.
The higher dairy product prices have now worked their way to consumers with
some buyers resisting higher prices, due to growing unwillingness of
customers to purchase at current price levels with some buyers beginning to
consider alternative products.
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

---

STAT News Service