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USDA Review of dairy market conditions in Australia and New Zealand.

OCEANIA OVERVIEW: The 2002 - 2003 milk production season in New Zealand is in the final few weeks as producers reduce daily milkings to once a day while others dry off their herds completely. At this point of the season, production on the North Island is reported to be trailing last year by slightly less than 1%, while the South Island is reporting nearly a 10% increase. With the North Island being New Zealand's main dairy region, milk handlers are projecting combined annual output for both islands to be between 2 - 3% ahead of last year. In recent weeks, seasonal declines slowed and plateaued somewhat which allowed milk handlers to generate some additional manufactured dairy products. In many instances, this additional product narrowed the gap between being short of supplies to being in a comfortable position.

In Australia, milk production is declining seasonally, although the seasons end is still a few months away. The overall lack of milk, compared to last season, continues. Reports of a 10% decline from last year continue. Lack of moisture, specially in the Victoria region of Australia, is the leading factor in lower milk output during the current season. Some recent moisture has been reported, but still well short of needed volumes. Producers and handlers are hopeful that during the final months of the season and during the upcoming winter months, moisture will be prevalent to once again replenish low water tables or they could be facing a another year of disappointing milk volumes. Financial concerns are also facing more producers. At this point, Australian dairy product handlers are fully aware of their supply situation in comparison to their known commitments, but for the most part, are basically in balance and indicate that there will be minimal if any additional stock available for spot buyer interest. New international sales are reported to be very light, but producers and handlers feel that potential buyers are aware of the Oceania supply situation and are not even questioning availability. Shipments of contracted volumes of manufactured dairy products are occurring basically as scheduled.

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