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OCEANIA OVERVIEW: Milk production in New Zealand and Australia continues to build toward seasonal peak levels. In New Zealand, the North Island is getting close to peak levels with reports from the South Island indicating that strong growth continues to occur. At this point, overall output in New Zealand is running between 3 - 4% ahead of last year at this time. Milk handlers remain optimistic that annual output will be in the area of 2% heavier than last year. Many indicate that even though production still has a ways to go before reaching peak levels in much of the country, milk handlers indicate that there are still weather related factors that could greatly influence production trends for the last half of the season.

In Australia, milk output continues to increase toward seasonal peak levels although overall milk volumes are trailing last year. Some real good rains have occurred in Victoria over the past month, although these are not having a significant positive impact on overall production trends. Official Australian milk production figures for the first quarter of their year (July - September) are due to be released soon and many milk handlers are not overly optimistic about the results of the report. The season has been slow in developing in comparison to previous years, thus many are expecting overall declines of 8 - 9% to be reported. Stocks of manufactured dairy products in Oceania are in close balance to tight. Often, new production has already been fully committed, thus additional volumes for spot or new buyer interest are limited, if available at all. Although milk production trends are more positive in New Zealand than they are in Australia, handlers and traders in both countries are very cautious to not over commit themselves.

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