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  April 7, 2010

Uncertainty from Oceania may be driving some of the U.S. product price rally on the CME as Kiwi farmers report very dry mid-to-late season grazing conditions in New Zealand’s North Island, which began sharply cutting into that region’s mainstay of production in the past six weeks or so.

In it’s April 1 report of international dairy markets, USDA confirmed Oceania milk production is winding down the season at lower rates, and milk producers and handlers are not anticipating recovery.

They site lack of autumn moisture as the major factor contributing to the production decline, where output has dropped so quickly that farmers are reportedly reducing their milkings to once per day or resorting to earlier dry-offs.

With these recent trends, milk production estimates for the year in New Zealand are again being adjusted to be more equal to last season’s production to as much as 1% higher, despite previous forecasts of greater increases in production, according to USDA. This reportedly has New Zealand milk handlers and manufacturers very concerned about end of season commitments.

Prices on Fonterra’s world auction this week were up 22 to 25% over the March auction, with powder prices showing significant strength in the bidding.


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