MD_DA120
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MD DA120 OCEANIA DAIRY MARKET OVERVIEW

MADISON, WI.  JULY 9, 2009 (REPORT 27)

OCEANIA OVERVIEW:  

Milk production in New Zealand and Australia is at seasonal low 
levels as the winter season is well underway.  Moisture during 
the winter months continues to be limited in most areas of both 
countries.  In Australia, a recent report from the Bureau of 
Meteorology indicates that an El Nino weather pattern is quickly 
emerging as a reality based on recent developments in climate 
indicators.  The odds for El Nino, an abnormal warming of the 
eastern Pacific Ocean that creates havoc in weather patterns 
across eastern Australia, have risen significantly since two 
weeks ago, when the bureau said there was a more than 50% chance. 
 With the dairy industry of Australia basically centered in the 
Southeastern portion of the country, El Nino weather patterns 
will further add to the frustration of milk producers.  Dairy 
producers and other agricultural enterprises in the region have 
been dealing with low and often limited moisture levels for many 
consecutive years.  New Zealand milk producers and handlers are 
hopeful that this weather pattern will not impact them, but many 
state that this weather pattern has influenced weather conditions 
for them in the past.  Most major Australian dairy manufacturers 
have announce opening milk prices for the 2009 - 2010 season in 
the past week, bringing to reality the effects of the weakness in 
dairy export markets and the unwelcomed strength of the 
Australian dollar.  Prices announced so far are between $0.25 - 
0.28 per liter (in Australian dollars) down 35 - 38% from last 
year.  Oceania traders and handlers continue to voice their 
displeasure with export subsidies for the U.S. and Europe as the 
DEIP program was again announced in the states and additional 
export subsidy adjustments are anticipated out of Europe.  
Traders state that these assistance programs will only further 
delay possible market recovery for dairy producers and the 
industry.  Prices for manufactured dairy products in the Oceania 
region are generally holding steady, although a firm undertone 
prevails.  At the recent global/Dairy trade event for whole milk 
powder, the average price of $1829 per MT was down 3%.  Prices 
for near term shipments (September) were down 8% averaging $1841, 
Oct - Dec shipments $1806 (-4.6%), and Jan- Mar shipments $1849 
(+1.9%) when compared to the previous trading session.

0930c steve Schneeberger  (608)250-3204