Oceania milk production below year-ago levels

Dairy markets finished the holiday-shortened week on a high note. Cash cheese barrels held steady at $1.51 but blocks gained 2.5 cents to $1.65 on an unfilled bid. Class III futures saw some nice increases through 2010 with the February contract going over the $15.00 mark and July, August, September and August 2010 at $16.00 or better.

The futures got a shot-in-the-arm from down-under, Dairy Market News reports milk production in New Zealand and Australia has peaked-out at lower-than-expected levels. Unseasonably hot weather in recent weeks are the reason…milk production in Australia in September was 7.2 percent below last year and July through September output is 3.9 percent under year-ago levels. Reports are some manufacturers and handlers in Oceania are cancelling some commitments and are reluctant to enter more.

Meanwhile, milk production in the European Union was down 1.3 percent in September and reports are all member-nations are below production quota.

Cheese production is expected to pick up for the next few days in the U.S. with schools closed for Thanksgiving, demand for fluid milk declines and more will move into manufacturing. The latest Cold Storage Report from USDA says that as of the end of October there were 968.4 million pounds of cheese in storage. That is 2 percent below a month ago but 17 percent higher than a year ago. More than half of the inventory is American type cheese, 579.6 million pounds, down 3 percent from the end of September but up 7 percent compared to October of last year.