Oceania Dairy Market Overview

MADISON - May 8/08 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:  Milk production in the Oceania region is now
nearing seasonal low levels with ongoing output going for fresh
products for domestic needs.  Currently, milk output in New Zealand is
trailing last season by 3.6% with season end projections probably
nearing more closely to 4% lower than the 2006-2007 season.  Rainfall
has been reported in many areas of the North Island where drought
conditions severely impacted milk output during the second half of the
current season.  Milk producers and handlers state that current
rainfall will have no impact on the current milk production season,
but will provide much needed moisture for winter crops and pasture
growth for the new season.  Milk output on the South Island of New
Zealand is running stronger than the North Island and is reported to
be at about 45% of peak levels.   In Australia, milk output continues
to trend lower and trails last season.  As the season winds down,
negative production volumes, when compared to last season, are
continuing to narrow with milk handlers projecting a 5% decline from
last year, which would be 15% lower than the peak year of 2001 - 2002.
Producers in both countries had to deal with lack of moisture for
varying parts of the current season, but are optimistic about the new
season which will resume in a few months.  At this time of the season,
shipments of product are coming from inventoried stocks generated
earlier in the season.  In many instances, these inventories are not
at desired levels, thus some handlers and traders might need to reach
to outside sources for supplemental needs.  Conversations are already
starting for third quarter commitments, although many potential buyers
are not overly aggressive to lock in at this time and are taking a
wait and see attitude.  Most indicate that they want to wait and see
how other markets, especially in the northern hemisphere, develop
during the upcoming production season.  Prices for potential buyers
are also a concern and early indications are that prices may be
slightly lower than current levels.

0930c steve Schneeberger  (608)250-3204

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STAT News Service

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