FED: Russian rouble devaluation helps lower dairy forecast

AAP General News (Australia)
12-15-1998
FED: Russian rouble devaluation helps lower dairy forecast

(EDS: EMBARGOED TO 1200 AEDT TUESDAY DECEMBER 15)

CANBERRA, Dec 15 AAP - Russias devaluation of the rouble dampened the outlook for the
Australian dairy industry in 1998/99 but exports were still expected to rise by four per cent
to more than $2 billion, ABARE predicted today.

World dairy markets are expected to be affected by the roubles devaluation, as Russia is
the worlds largest butter importer and also buys a significant amount of cheese.

The Australian Bureau of Agricultural and Resource Economics has downgraded the expected
value of Australian dairy exports by 0.04 per cent to $2.014 billion, down from the $2.098
billion it forecast in September.

ABARE said the figure was still four per cent up on last years exports, with the weaker
Australian dollar cushioning returns from falling international skim milk powder prices.

"Manufacturing milk prices in Australia are forecast to increase by 1.3 per cent in 1998/99
to an average 24.2 cents per litre," ABARE said.

The average farmgate price for market milk is expected to drop one per cent to 51.5 cents a
litre because of a reduction in the regulated farmgate price of milk in NSW.

"World butter prices are forecast to fall by two per cent in 1998/99 to average $US1,637
per tonne," ABARE said.

That is down from $US1,656 forecast in the September quarter.

The skim milk market has also been affected by the rouble devaluation, because EU cheese
manufacturers have diverted more milk into skim milk powder and butter, and US sales of
subsidised milk powder are also expected to keep prices low.

International spot prices for skim milk powder are expected to fall by 13 per cent in
1998/99 to average $US1,378 a tonne, down from the September forecast of $US1,590 a tonne.

AAP msl/mfh/rsm/br

KEYWORD: ABARE DAIRY

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