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USDA Dairy Market Overview

OCEANIA OVERVIEW: The milk production season continues to build in Oceania. In New Zealand, early season reports indicate that milk output is running around 5% ahead of last year at this time, with overall annual production estimate increases running in the 2 - 3% range. Early on, South Island production is gaining momentum quite quickly basically due to more animals than last year.

In Australia, the milk production season is just getting underway and early reports indicate that growth appears to be slower than last year. In recent weeks, rainfall has been classified as average for early spring in most dairying regions of the country. As a result, improving water storage levels across northern Victoria and consequently, better prospects for allocations of irrigation water; as well as the likelihood of a larger winter grain crop gives some cause for optimism. However, the long range weather forecast for the balance of the calendar year indicates that rainfall amounts will be below average in key dairying regions of Australia. With these current and projected weather conditions, annual production estimates remain in the 1 - 2% ahead of last season range.

As milk production increases in New Zealand and Australia, manufacturing plants are gearing up production schedules accordingly. In New Zealand, milk production is increasing to the point that casein production is starting to occur. Although many plants are actively generating manufactured dairy products, stocks remain limited. Early season shipments are on schedule and handlers do not foresee problems in meeting future schedules at this point. Prices for Oceania dairy products are higher. Oceania handlers and traders indicate that recent subsidy adjustments in Europe plus fresh supply tightness and better demand from some international buyers are some factors contributing to firmer prices.

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