November 24, 2004
Australia, New Zealand Dairy Market Overview
The New Zealand weather situation has improved to conditions better suited for milk production with traders hoping for an extended period of good milk receipts. Overall milk production has been below a season ago for most of the current production season. Traders are reluctant to make new production forecasts for the current season after a very poor start to the season. Milk production is past the annual peak with the hope of continued good weather providing an extended period of slow declines.
In Australia, some areas of the country have been receiving good rains and water storage levels have increased but still remain below normal. Pastures are in fairly good summer condition where the rains have been more plentiful. Victoria, which is the major dairy area, has been receiving timely rains. Other areas have not been as lucky and dry conditions continue.
Grain prices have declined to more typical levels after the drought induced high prices due to limited production and increased use for cattle feed. However, cow numbers remain down after heavier drought related culling and it will take time to rebuild herds. Australian milk production is likely just past its annual peak, but with many pasture based systems, weather conditions can impact receipts greatly.
Currency issues continue with both the Australian and New Zealand dollars firm, at least against the US dollar. Some traders are concerned that strong currency and high oil prices may cause some Asian customers to cut back on dairy product use in upcoming months. Other traders also feel that some Asian buyers may have been stockpiling inventory for use in 2005.
Overall spot dairy product supplies are lighter than desired with some concern by exporters on meeting the late season and off season needs of regular customers as well as spot interest. A large international dairy industry meeting held in Australia this week is bringing many traders, government officials, and others in the industry together.
