Drought is slowly spreading in Australia [News Oceania n°23/2015]

Period: November 16 – December 11, 2015

This report covers a whole month, instead of the last 15 days as usual.

AUSTRALIA

• Milk production: is below year ago levels, mainly because of drought. There are expectations of revisions in some previous projections of an higher production for this year.
• Weather situation: slowly spreading dry conditions in the most significant dairy regions.
• Milk Producers: are now struggling with increasing dryness and high irrigation water prices.

NEW ZEALAND

• Milk production: is behind expected levels but still at a high level.
• Milk producers: cows are being dried off at higher than normal rates partly reflecting pressure from lower milk prices.

MILK PRODUCTION

• Australia *: +1.91% (Jul-Oct 15 vs. Jul-Oct 14)
• New Zealand *: -3.45% (Jun-Oct 15 vs. Jun-Oct 14)

BUTTER (82%): prices are stable. Sales are strong into retail channels but weaker for bulk butter. Price movement up and down is expected in the near future.

CHEDDAR CHEESE: prices unchanged. Some milk supplies are down, slightly reducing cheese production. However, cheese from the E.U. is competitive, which is a factor maintaining stable Oceania cheese pricing.

SMP: prices are trending lower. Production is steady. Buyers are not motivated to finalize purchases due to good existing inventories as well as a feeling that prices will continue to show weakness. A number of sellers prefer to hold inventories in hopes of future price firming.

WMP: prices are lower. Production is trending lower but still active for this time of year. No driving demand is evident now, with China buyers quiet and Middle East and Africa buyers mostly supplied.

The weaker export demand for New Zealand dairy powders to traditional markets such as China, is increasingly a concern.

In Oceania the prices of SMP and WMP are trending lower. However the GDT auction index was up 1.9% in December 15th.

SMP: today’s GDT auction results (December 15th, 2015)

WMP: today’s GDT auction results (December 15th, 2015)

Note: · Assessments about market trend are expressed in US$; · * Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand).

Source: USDA summarized by the CLAL Team

More informations about milk production in New Zealand and Australia are available on CLAL.it