Report 1 – Released on January 2, 2020

AUSTRALIA:

Milk production in Australia continues the seasonal decline. During November, milk oduction was 3.4 percent below November last year, according to Dairy Australia. More detailed production data for the first five months of the season are in the table which follows.

     AUSTRALIA MILK PRODUCTION, MILKFAT and PROTEIN

                            July - November 2019     November 2019

                            Million Percent Change   Percentage
     State                  Liters  From 1 Year Ago  Milkfat Protein

     New South Wales          464.0  -7.6            3.95    3.26
     Victoria               2,666.3  -4.7            4.02    3.41
     Queensland               141.2 -14.7            3.88    3.24
     South Australia          198.2 -10.5            3.77    3.28
     Western Australia        159.6  -4.3            3.88    3.29
     Tasmania                 384.8  +0.2            4.10    3.50
     Australia (Total)      4,014.1  -5.3            4.01*   3.39**

     *  +0.3 percent from prior year period
     ** +2.1 percent from prior year period
Data from Dairy Australia Market activity has been quite slow during the two week holiday period. Manufacturers feel that stocks of manufactured dairy products will be a bit tight during Q1 2020.  Orders have been good and milk production is seasonally declining.Australia continues to struggle from a nationwide fire crisis.
Wildfires have been burning in various areas for months. The current focal area is Victoria and New South Wales. Some fires are so intense and vast that they are reported to
 have generated their own weather systems. Dry and hot weather contribute to the situation. It is difficult at this time to determine the impact on the Australian dairy 
industry with much precision. Additionally, it is very uncertain how long the fires will burn, or in which direction they may move in future weeks.

NEW ZEALAND:

New Zealand is a couple of months into the seasonal decline in milk production.Nevertheless, production volumes are still relatively high. Some current production is intentionally focused on filling contract obligations several months ahead, especially whole milk powder. In some cases, manufacturers are targeting further ahead to continue building stocks into the low milk production seasonal carryover period, June, July, and August.Market activity has been quiet during the two week holiday period. This has been coupled with a three week gap between GDT events, further reducing new price signals. While dairy manufacturers are running plants on active schedules, the sales side of operations is in a quiet period.

There is increasingly voiced concern from agricultural lenders about dairy producer debt.This has led to more conservative lending practices. Dairy financial distress is a topic getting more attention in New Zealand. Mitigating this, observers increasingly expect more strength in New Zealand milk pay prices for the current season.

Information for the period December 23, 2019 -  January 3, 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
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