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The USDA review of dairy market conditions in Australia and New Zealand

OCEANIA OVERVIEW: Milk producers and handlers in the Oceania region are adjusting milking and processing schedules according to the declining milk flow. In both Australia and New Zealand, manufacturing facilities are closing down for the season or those that remain open are adjusting their processing schedules toward products of most need. In most dairy plants in the Oceania region, milk can be processed into one of many different products at one location ranging from casein to powdered milk. Casein is usually the first product to be cut back with skim and whole milk powder the last. This is the situation again this year.

Stocks of manufactured dairy products in the region are reported to be in close balance to comfortable with known needs for the upcoming winter months. Manufacturers and handlers indicate that although stocks seem to be in balance, additional late season production will be appreciated and will ease questionable stock levels at some locations. Annual milk production figures for both New Zealand and Australia have not changed from recent releases. In New Zealand, milk output is still projected to be around 2 - 3% ahead of last season, while around 10% lower in Australia. Lack of moisture in the major milk producing area of Australia, Victoria, is the main factor being attributed to decline in milk production during the current year.

Stocks of dairy products are sufficient to sustain steady shipments and timely delivery schedules. Most trading activity continues to centre on regular and ongoing customer needs with minimal new buyer interest being reported. Oceania handlers report that, although Oceania supplies are quite limited for new buyer needs, international sales activity is light. Slow international sales are being attributed to various factors ranging from economic weakness in many markets, lingering uncertainty in Iraq, potential impact of the SARS outbreak in China and elsewhere in the world, and potential import cutbacks by some importing countries. All of these factors will have a definite impact on market development during the upcoming weeks and months.

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