Oceania Dairy Market Overview
USDA - Thu Dec 07, 9:34AM CST
MADISON, WI.  December 7, 2017 (REPORT 49)


       July-October milk production in Australia is up 2.7 percent over July-
October last year. Breakdown by state showing July-October production and percent 
change year to date is shown in the chart below.
Australia Milk Production 
       October 2017
                      (Million  (% Change YTD 
                       Liters)  From 1 Year Ago) 
New South Wales         401.0     -0.9
Victoria              2,222.7      3.6      
Queensland              144.8     -4.8
South Australia         172.8      6.3
Western Australia       132.1     -1.1      
Tasmania                255.4      5.5      
Australia (Total)     3,328.8      2.7  

Data From Dairy Australia    

	While national production is up, three regions more focused on supplying the 
Australian domestic milk markets continue to lag. New South Wales, Queensland and 
Western Australia dairy producers continue to report being squeezed financially. 
Negative percentages reflecting lower milk production volumes contribute to 
overall income challenges compared with producers in other regions. 
	A government commission has called for adopting a code of conduct for 
Australian dairy processors. One of the concerns voiced was a belief that dairy 
producers do not receive additional pay price benefits from the sale of milk at 
higher retail prices, such as branded milk. Another goal of the commission's 
recommendations is to make it easier for dairy producers to switch to a processor 
offering better terms and conditions, as well as to improve production signals 
and competition at the farmgate.


	It is early summer in New Zealand and hot in many areas. Humans and cows are 
seasonally adapting to the heat. Early concerns about pasture dryness are voiced. 
Thoughts are increasing that threats of drought and the impact on milk production 
contributed to this week's strengthening prices for some GDT commodities, such as 
whole milk powder and skim milk powder, among others. That concern seems to have 
eclipsed worry about the milk production growth in the EU and the stockpiles of 
skim milk powder there.
	A large dairy cooperative in New Zealand will review its seasonal milk price 
forecast in the near future. Some observers are apprehensive that the forecast 
pay price will be reduced. This is causing some angst for producers who are still 
repaying debt incurred during the big slump in milk prices during 2014-2016.
	A new government policy will restrict the ability of foreign buyers to 
acquire most New Zealand farmland tracts larger than 5 hectares (slightly over 12 
acres). Many dairy producers seem to favor this policy as a step toward reducing 
upward pressure on farmland prices and hence, the cost of land ownership. There 
has been some concern with well-financed foreign buyers outbidding New Zealand 
agricultural producers for good land.
       At the December 5 GDT event #201, all contracts prices ranged from 4.7 
percent higher to 11.1 percent lower from the prior event across categories. The 
all contracts price averages (US$ per MT) and percent changes from the previous 
averages are: anhydrous  milk fat, $6,836, -0.6 percent; butter, $4,575, -11.1 
percent; buttermilk powder, $1,957, +4.3 percent; cheddar cheese, $3,696, -3.9 
percent; lactose, n.a.; rennet casein, $4,879, +3.4 percent; skim milk powder, 
$1,774, +4.7 percent; and whole milk powder, $2,830, +1.7 percent.

1300CT eric.graf@ams.usda.gov  
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: http://www.ams.usda.gov/market-news/dairy 
Dairy Market News database portal: http://www.marketnews.usda.gov/mnp/da-home