Oceania Dairy Market Overview

MADISON - Jan 7/16 - SNS -- The USDA published its latest review of dairy market conditions in Australia and New Zealand today.

OCEANIA OVERVIEW:
The China-Australia Free Trade Agreement (ChAFTA) begins its first full year on
January 1, 2016, following a shortened December 20-31, 2015 first year. The 2016
period will yield tariff reductions from 2015, and begin a path to reaching zero
tariffs for all dairy exports from Australia to China. Construction will begin in
2016 for a new state-of-the-art cheese plant in Stanhope Australia able to produce
45,000MT of cheeses each year. Varieties will include parmesan, gouda and
mozzarella. The capacity triples capacity of a plant destroyed by fire in 2014.
Enterprises manufacturing consumer packaged infant formula and nutritional powders
will be looking for more milk in 2016 to support production volumes, finding good
gross margins from this focus. The view in Australia is that El Nino is near its
peak and that leaves uncertainty as to whether summer rainfall will be below
average or above. Irrigation water allocations and water remain expensive and
thus, not much traded. The quality of feed grains remains variable. Some Victoria
growers are putting more hay into storage, reducing currently available volumes,
in expectation of a dry season ahead. Some crops and stored hay were destroyed by
fires in central South Australia. High cull cow prices continue to induce some
producers to reduce herd sizes to more easily cope with dry conditions. Dairy
Australia reports dairy product exports for the July-October period totaling 243.4
thousand MT, up 8.1% from the year ago period. Various dairy product export
changes compared to the same period last year are: butter, -26.2%; butter oil,
-35.4%; cheddar, +9.9%; SMP, +43.6%; WMP, -0.9% and whey products -45.3%.  The
total value of exports for the July-October period was up 6.9%. October 2015 New
Zealand milk production as reported by DCANZ was 3,211 million MT, down 2.67% from
October 2014 but 1.74% higher than the level two years ago.  At the January 5 GDT
event #155, average prices ranged from 4.4% lower to 11.4% higher from the prior
event across categories. The all contracts price averages (US$ per MT) and percent
changes from the previous average are:  anhydrous milk fat, $3,644 -2.7%; butter,
$3,314 +6.7%; buttermilk powder, $1,586 +1.0%; cheddar cheese, $2,964 +3.5%;
lactose, $594 +11.4%; rennet casein, $4,736 +3.9%; skim milk powder, $1,890 -0.8%;
sweet whey powder, n.a.; and whole milk powder, $2,210 -4.4%.
0930C Eric.Graf@ams.usda.gov  608.557.7005
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

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