Oceania Dairy Market Overview
MADISON, WI.  October 12, 2017 (REPORT 41)


       July-August milk production in Australia is up 1.6 percent over July-August 
last year. Breakdown by state is shown in the chart below.
Australia Milk Production 
       July-August 2017                (Million  (% Change YTD 
                       Liters)  From 1 Year Ago) 
New South Wales         194.9      2.1
Victoria                929.6      2.3      
Queensland               72.2     -2.6
South Australia          72.3      1.1
Western Australia        62.0     -2.5      
Tasmania                 65.3     -0.2      
Australia (Total)     1,396.3      1.6  

Data From Dairy Australia    

       It is still early in the milk season. The current season is projected to 
record growth in milk production near 2.5 percent. Better profitability on many 
farms is contributing to these expectations. For many dairy producers this is a 
period of recovery from recent bad years with squeezed margins and resulting 
disappointing profitability. Favorable weather in some regions has contributed to 
keeping costs of production lower in recent months.
       The Australian Competition and Consumer Commission (ACCC) has been 
conducting an inquiry into the competitiveness, trading practices, supply chain 
and transparency of the Australian dairy industry. Last October the Australian 
Treasurer ordered the inquiry to be conducted. The reporting deadline has now 
been extended until April 30, 2018. A reason for the extension was said to be to 
permit interim findings to be released by November 30, 2017, then receive 
comments from the dairy industry to be considered in the final report. 
       It is generally acknowledged that this inquiry resulted from the retroactive 
cuts in payments to dairy producers for milk by one of the largest cooperatives 
in Australia. Many of the processing facilities of that cooperative have been or 
are in the process of being sold. This has resulted in many Australian dairy 
producers seeking new outlets for their milk.

       August 2017 New Zealand milk production was 1.3 million MT, up from 0.2 
million MT in July, according to DCANZ. August milk solids, 111.4 million kg, are 
up from 21.5 million kg in July. During August 2016, milk solids were 113.1 
million kg.
       Results for September production will not likely be available until 
approximately the 20th of October. At the present time, a number of experienced 
industry personnel in New Zealand expect September 2017 production to also lag 
September 2016. This week in October marks a continuing period of heavy rain in 
many parts of New Zealand. That continued to take a toll on pasture conditions 
and of course, current milk production. Nevertheless, there are cautious 
expectations for improvement season-on-season because monthly production 
typically does not begin declining until February. Even April is often a better 
production month than September, so there is certainly time for the season to 
       At the October 3 GDT event #197, all contracts prices ranged from 1.9 
percent higher to 10.3 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, $6,504, -3.4 percent; butter, $5,837, -3.6 
percent; buttermilk powder, $1,804, -10.3 percent; cheddar cheese, $4,109, +1.9 
percent; lactose, n/a; rennet casein, $6,123, +0.9 percent; skim milk powder, 
$1,895, -1.4 percent; and whole milk powder, $3,037, -2.7 percent.

0930C 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