MD_DA120

     Oceania Dairy Market Overview

     Report 13 - Released on March 26, 2020

     AUSTRALIA:

     Some agricultural bankers in Australia project that Australian milk production this season
     will be as much as 4.9 per cent lower than last season. Very good demand is expected to help
     seasonal milk prices for producers.

     Australian dairy producers have experienced a clear increase in demand from Australian
     consumers. Cheese, butter, and fresh milk experienced increased demand in supermarkets.
     Demand is called unprecedented by some observers. Some dairy bottlers report record volumes
     of fluid milk going out the door. Increased UHT milk demand is also noted.

     A contributing factor is that to address impacts of COVID-19, the Australian Prime Minister
     has activated a plan to close or curtail service in many businesses. Consumers are
     increasing food supplies at home in response. In the end, this is likely buying ahead, but
     is certainly spiking current dairy manufacturing and sales.

     NEW ZEALAND:

     Reports from New Zealand are that milk production is looking fairly poor.  A large-scale
     drought was declared a few weeks ago across the entire North Island and part of the South
     Island. Some areas have started to have a little bit of rain over the past week or so but
     it's too late for many. Some Waikato farmers are starting to dry off their herds already
     (about 2 months earlier than usual).

     A large New Zealand dairy cooperative reported interim results last week. Observers in New
     Zealand note that it is back to making a profit. The cooperative has also held the milk
     price forecast at NZ$7 - $7.60, and the milk production forecast at -0.5%. Some other dairy
     observers in New Zealand forecast this season’s milk at $7 and for next season, $6.23.

     There is increasing belief that processors are managing okay in getting dairy product
     shipped, and China is buying again. Whether that will last is the question. Most of this
     season's dairy output has been sold, estimated to be in the range of 80 percent sold.

     COVID-19 analysis concerning New Zealand has tended to focus on dairy export matters,
     generally involving China. Now the focus has become events within New Zealand resulting in
     some uncertainty as to impacts on the New Zealand dairy industry. The Prime Minister raised
     the coronavirus alert level to 3 early this week. Beginning at 11:59 pm Wednesday New
     Zealand time, the level increased to 4, mandating closure of many businesses, for four
     weeks.

     Sources in New Zealand’s dairy industry comment that essential services are allowed to
     operate, which includes dairy producers and dairy processors. However, they will be
     minimizing on site staff and anyone who is not critical will be working from home. That
     means that dairy product will still be able to be exported, but there may be some internal
     slowdown. Most processors seem to be working out a plan of how they will operate in the
     current environment.

     In New Zealand retail stores, there are very empty supermarket dairy coolers and shelves.
     Contacts say it is a demand issue because staff simply can't get product on the shelf fast
     enough, even though product is believed to be available in distribution centers. A future
     dairy export question becomes how the new countrywide conditions may affect moving dairy
     products from producer to processor, then into export channels, in terms of transportation
     and infrastructure.






     Information for the period March 16 - 27, 2020, issued biweekly

     Published by:
     Dairy Market News - Madison, WI
     Eric Graf, 608.422.8590
     Email: Eric.Graf@usda.gov

     Additional Dairy Market News Information:
     Dairy Market News (DMN) by Phone: (608)422-8602
     DMN Website: https://www.ams.usda.gov/market-news/dairy
     DMN MARS (My Market News): https://mymarketnews.ams.usda.gov