Oceania Dairy Market Overview

MADISON - Jan 19/12 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:

Milk production continues to trend lower in both New Zealand and
Australia.  Wet conditions continue to prevail on the North Island of
New Zealand, but limited moisture and close to drought conditions
prevail in the southern tip of the South Island.  With these two
moisture extremes within the same country, milk production on the
downside of the season may be significantly impacted.  All in all,
milk processors and handlers indicate that milk output and receipts
are basically in line with projections.  New Zealand handlers continue
to project a 3 - 4% annual increase over last season.  In Australia,
the high temperatures of two weeks ago in Northern Victoria have
moderated.  Milk producers and handlers were concerned about what
impact these temperatures might have on milk output on the downside of
the season.  Reports are indicating that milk volumes did decline at a
faster pace than prior to the heat, but plateaued as temperatures
eased.  Milk producers feel that they will not be able to recover what
was lost, but at least the sharper decline slowed.  Current
temperatures remain warm reaching 35 C (95 F) during the past week,
but often moderate within a day or two.  Milk producers indicate that
warm summer temperature patterns are starting to become more
prevalent, thus milk production could potentially decline at a faster
pace during the balance of the season.  Moisture does fall in
Australia and refreshes parched land, but pasture conditions are often
starting to deteriorate at a faster pace than replenishment.  Milk
producers and handlers remain optimistic about the season and continue
to project a 2 - 3% seasonal increase over last year.  Traders and
handlers of manufactured dairy products are indicating sales activity
is slow to develop following the yearend holiday period.  Some
enhanced butter demand is reported, but outside of this, regular
contractual shipments continue to be reported.  During the g/DT
auction #60 on January 17, prices were again mixed.  For those
products that experienced firm average price trends during the last
auction, price averages were weaker during this event and for those
products that experienced weaker price trends last time, firm averages
were recorded this time.  For skim milk powder (U.S. sourced) contract
#1 (February), the price averaged $3,032 per MT, 0.3% more than the
previous auction.  Contract #2 (March) average prices and changes from
the previous session are:  anhydrous milk fat, $4,054/MT, +4.6%;
buttermilk powder, $3,430, -4.3%;, skim milk powder, $3,337, +2.9%;
whole milk powder, $3,517, -0.6%; milk protein concentrate $5,775/MT -
1.2%; rennet casein $7,990/MT +3.7%; and cheddar $3,757/MT, +5.5%.

0930c steve Schneeberger  (608)278-4154

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STAT News Service

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